Shares of IPG Photonics (IPGP) are plummeting 10.26% in pre-market trading following the release of disappointing first-quarter 2025 financial results and a weak second-quarter outlook. The company, which specializes in high-power fiber lasers and amplifiers, reported earnings that fell significantly short of analysts' expectations, raising concerns about its near-term performance.

For the first quarter, IPG Photonics reported earnings per share (EPS) of $0.09, well below the $0.21 estimated by analysts. While the company's revenue of $227.8 million slightly exceeded the expected $227.1 million, other key financial metrics disappointed investors. Operating income came in at $1.8 million, less than half of the estimated $3.19 million, while net income was reported at $3.8 million, significantly below the $9.16 million analysts had projected. The company's gross margin for the quarter stood at 39.4%, with an operating margin of just 0.8%.

Adding to investor concerns, IPG Photonics provided a cautious outlook for the second quarter of 2025. The company expects Q2 revenue to range between $210 million and $240 million, potentially falling short of the $239.9 million analysts were anticipating. Moreover, the projected adjusted EPS for Q2 ranges from a loss of $0.05 to a profit of $0.25, significantly below the $0.37 EPS that analysts had forecast. This weak guidance, coupled with the Q1 earnings miss, appears to be the primary driver behind the stock's sharp pre-market decline as investors reassess the company's growth prospects in the face of challenging market conditions.