Applied Optoelectronics (NASDAQ:AAOI) Stock Falls 7.3% – Time to Sell?

Applied Optoelectronics, Inc. (NASDAQ:AAOI)’s share price was down 7.3% on Wednesday. The company traded as low as $57.24 and last traded at $59.27. Approximately 15,506,996 shares traded hands during trading, an increase of 48% from the average session volume of 10,485,362 shares. The stock had previously closed at $63.97.

Key Applied Optoelectronics News

Here are the key news stories impacting Applied Optoelectronics this week:

• Positive Sentiment: Third-quarter results beat estimates: adjusted earnings were $0.17 per share versus $0.14 expected, while revenue of $269.9 million rose 127.5% year over year. The company also reported a sixth consecutive quarter of record revenue and a return to GAAP profitability. Third-quarter results
• Positive Sentiment: Datacenter and CATV sales benefited from demand for 800G transceivers and record broadband equipment shipments. Management also cited accelerating demand for 1.6T products and a potential $1 billion–$1.5 billion hyperscaler deal, supporting the growth outlook. Q3 sales and demand
• Positive Sentiment: A rebound in AI optical stocks is providing a favorable sector backdrop, with investors revisiting recent earnings across the group. AI optical stocks rally
• Negative Sentiment: Fourth-quarter revenue guidance of $385 million–$420 million falls short of the $427.3 million consensus estimate, despite an EPS range that brackets expectations. Component shortages and delays ramping manufacturing capacity—including U.S. expansion issues—could limit the company’s ability to meet demand. Earnings call and capacity delays
• Negative Sentiment: Analysts lowered price targets: B. Riley cut its target to $45 and assigned a neutral rating, while Rosenblatt reduced its target to $115 but maintained a buy rating. The mixed revisions reflect uncertainty following the stock’s volatility. B. Riley analyst rating

Analysts Set New Price Targets

A number of analysts have commented on AAOI shares. Needham & Company LLC reduced their price objective on Applied Optoelectronics from $170.00 to $100.00 and set a “buy” rating for the company in a research report on Friday. Wall Street Zen upgraded Applied Optoelectronics from a “sell” rating to a “hold” rating in a report on Saturday, August 8th. Rosenblatt Securities decreased their price objective on Applied Optoelectronics from $220.00 to $115.00 and set a “buy” rating on the stock in a research report on Friday. Northland Securities upgraded shares of Applied Optoelectronics from a “market perform” rating to an “outperform” rating and set a $120.00 price objective on the stock in a report on Monday. Finally, B. Riley Financial decreased their target price on Applied Optoelectronics from $92.00 to $45.00 and set a “neutral” rating for the company in a research report on Friday. Four equities research analysts have rated the stock with a Buy rating, one has given a Hold rating and one has issued a Sell rating to the company. Based on data from MarketBeat.com, Applied Optoelectronics presently has an average rating of “Moderate Buy” and an average target price of $111.60.

Applied Optoelectronics Trading Up 6.9%

The company has a current ratio of 2.78, a quick ratio of 2.13 and a debt-to-equity ratio of 0.12. The firm has a market capitalization of $4.24 billion, a P/E ratio of -64.27 and a beta of 4.04. The business has a 50 day moving average of $94.22 and a 200-day moving average of $113.19.

Applied Optoelectronics (NASDAQ:AAOI) last released its quarterly earnings results on Thursday, November 5th. The semiconductor company reported $0.17 earnings per share for the quarter, beating the consensus estimate of $0.14 by $0.03. Applied Optoelectronics had a negative net margin of 9.57% and a negative return on equity of 1.98%. The company had revenue of $269.88 million during the quarter, compared to analysts’ expectations of $268.11 million. During the same quarter in the prior year, the company earned ($0.09) earnings per share. The business’s quarterly revenue was up 127.5% compared to the same quarter last year. Analysts anticipate that Applied Optoelectronics, Inc. will post 0.55 EPS for the current fiscal year.

Insider Buying and Selling

In other Applied Optoelectronics news, insider Hung-Lun Chang sold 32,172 shares of Applied Optoelectronics stock in a transaction dated Tuesday, September 8th. The stock was sold at an average price of $110.21, for a total value of $3,545,676.12. Following the sale, the insider owned 249,276 shares of the company’s stock, valued at $27,472,707.96. This trade represents a 11.43% decrease in their position. The transaction was disclosed in a document filed with the SEC, which is available through the SEC website. Also, insider Shu-Hua Yeh sold 6,000 shares of the business’s stock in a transaction dated Tuesday, August 18th. The shares were sold at an average price of $147.73, for a total value of $886,380.00. Following the completion of the sale, the insider owned 377,498 shares in the company, valued at approximately $55,767,779.54. This trade represents a 1.56% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last ninety days, insiders sold 52,172 shares of company stock valued at $5,985,036. Company insiders own 3.80% of the company’s stock.

Institutional Inflows and Outflows

A number of hedge funds have recently modified their holdings of the company. BlackRock Inc. acquired a new position in shares of Applied Optoelectronics during the 2nd quarter worth about $955,672,000. William Blair Investment Management LLC acquired a new stake in Applied Optoelectronics in the 2nd quarter valued at about $74,703,000. Renaissance Technologies LLC acquired a new stake in Applied Optoelectronics in the 1st quarter valued at about $47,817,000. Bank of America Corp DE bought a new position in Applied Optoelectronics during the second quarter worth about $33,712,000. Finally, Bank of New York Mellon Corp bought a new position in Applied Optoelectronics during the second quarter worth about $32,567,000. 61.70% of the stock is currently owned by institutional investors.

About Applied Optoelectronics

Applied Optoelectronics, Inc (NASDAQ: AAOI) develops and manufactures fiber-optic networking products and solutions. Its offerings include optical transceivers, transmitters, receivers, lasers, and related components used to transmit data across fiber-optic networks.

The company serves several communications markets, including data centers, broadband access networks, cable television, and telecommunications. Its products are designed for applications such as high-speed data transmission, fiber-to-the-home and other broadband deployments, network connectivity, and communications infrastructure.

Founded in 1997 and headquartered in Sugar Land, Texas, Applied Optoelectronics supports customers in multiple regions, including North America, Asia, and other international markets.