The OLED train isn't just rolling along, it's building up a big head of steam.

Universal Display (Nasdaq: PANL) may have missed analyst expectations with Monday night's first-quarter report, but the miss was actually a result of the company's own success. Here's how.

OLED technology is coming into its own as LG Display (NYSE: LPL), AU Optronics (NYSE: AUO), and Samsung Electronics do their best to keep manufacturing capacity in line with growing customer demand. That shows up in Universal Display's results as 126% higher sales year-over-year with strong gains in both commercial and developmental revenue.

And investors are catching on to this trend. Heading into this report, share prices had jumped by 40% in the past three months, more than doubled in six months, and nearly tripled in 52 weeks. Even after Tuesday's 18% drop, we're looking at a positively market-crushing stock here.

And that's how Universal Display tripped itself up in the first quarter. Stock warrants that the company used to raise cash in its formative years gained a lot of value as the stock price increased, forcing the company to take an $8.9 million non-cash hit to earnings, causing the bottom line to fall far below analyst estimates with a $0.31 GAAP loss per share.

The warrants will expire in August, unless they're exchanged for cash before then, and this shadow will no longer hang over Universal Display's shares. On the flippity-flip, the company made some hay out of rising share prices when it raised $215 million in a secondary offering this March.

This is just the beginning. Small smartphone screens are a good place to start, but the real money is in much larger OLED devices. Samsung, LG, and Sony (NYSE: SNE) all plan to sell 30-inch OLED TV sets in 2012, then expand screen sizes and unit volume over the next few years. A single 36-inch TV screen uses as much panel space as 100 3.6-inch smartphones, so it doesn't take huge unit shipments to make big difference to Universal Display's royalties.

And then there's the lighting panel opportunity, which hasn't even started yet, but will pose a serious threat to the traditional LED lights championed by Cree (Nasdaq: CREE) and others.

These are the factors that drive Universal Display's shares higher -- and hurt its bottom line until August. As you can see, there's plenty of runway in front of the company. The stock may be expensive, but sometimes you get exactly what you pay for. If you believe in OLED's future, these drops present the best times to invest.

Want to learn more about OLED technology and the business behind it? Add Universal Display to your Foolish watchlist.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Universal Display is a Motley Fool Rule Breakers recommendation. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.