Shares of NOW Inc. (DNOW) plummeted 7.12% in pre-market trading on Wednesday, despite the company reporting better-than-expected third-quarter earnings. The sharp decline comes as investors seem to focus on the company's revenue miss and potential concerns about future growth.

NOW Inc., which operates under the DistributionNOW brand, reported adjusted earnings per share of $0.26 for the third quarter, surpassing analyst estimates of $0.23. This represents a 23.81% increase from the same period last year. However, the company's revenue of $634 million fell short of the consensus estimate of $637.13 million, despite showing a 4.62% year-over-year increase.

While the earnings beat is typically a positive sign, several factors may be contributing to the negative market reaction. First, the revenue miss, although slight, could be raising concerns about the company's growth trajectory. Additionally, investors might be focusing on the broader economic landscape and its potential impact on NOW Inc.'s future performance, particularly in the industrial machinery and equipment sector. The upcoming merger with MRC Global, expected to close in the fourth quarter of 2025, may also be influencing investor sentiment as they assess the long-term implications of this strategic move.