IPG Photonics (IPGP) saw its stock price plummet 5.29% in pre-market trading on Tuesday, following the release of its third-quarter earnings report and fourth-quarter guidance. Despite beating revenue expectations, investors appeared concerned about the company's future outlook and declining margins.

The laser manufacturer reported Q3 revenue of $250.8 million, surpassing analyst estimates of $240.2 million. However, the company's earnings per share (EPS) came in at $0.18, down from $0.29 in the same quarter last year. The operating margin also declined to 3.1%, while the gross margin improved slightly to 39.5%.

The main driver behind the stock's sharp decline appears to be IPG Photonics' disappointing Q4 guidance. The company expects fourth-quarter revenue between $230 million and $260 million, with adjusted EPS ranging from $0.05 to $0.35. This outlook falls short of analyst expectations, particularly on the earnings front. Additionally, the company warned of increased risks to its outlook due to current uncertainties related to the trade environment and tariff policies, further dampening investor sentiment.