Proto Labs (PRLB) shares plummeted 5.71% in intraday trading on Friday, despite the company reporting better-than-expected third-quarter results. The significant drop in stock price suggests that investors may be focusing on the company's fourth-quarter outlook, which appears to have raised some concerns.

For the third quarter ended September 30, Proto Labs reported adjusted earnings per share of $0.47, surpassing the analyst consensus estimate of $0.39. Revenue for the quarter came in at $135.37 million, beating the expected $133.83 million and representing a 7.8% increase year-over-year. The company's adjusted net income reached $11.4 million, also exceeding the analyst estimate of $9.41 million.

However, the company's fourth-quarter guidance may be the primary driver behind the stock's sharp decline. Proto Labs forecasts Q4 adjusted earnings per share in the range of $0.30 to $0.38, with revenue expected between $125 million and $133 million. The midpoint of this revenue guidance suggests a potential sequential decline, which could be contributing to investor concerns about the company's near-term growth prospects. Despite the strong Q3 performance, the market appears to be pricing in a more cautious outlook for Proto Labs in the coming months, leading to the significant sell-off in the stock.