Applied Optoelectronics (NASDAQ:AAOI) Shares Gap Down - Should You Sell?

Key Points

• Applied Optoelectronics shares gapped down about 12.6%, opening at $115.53 and last trading near $109.83 after a prior close of $127.01 on heavy volume.
• The company beat quarterly EPS expectations and saw revenue rise 33.9% year-over-year, but remains unprofitable (negative net margin and P/E) and set Q1 guidance of -0.090 to 0.000 EPS; analysts’ consensus is a Hold with a $52.80 target.
• Insiders have sold substantial stock (273,433 shares, ~$23.3M, over 90 days) while large institutional investors dramatically increased positions, creating conflicting insider and institutional signals.

Applied Optoelectronics, Inc. (NASDAQ:AAOI - Get Free Report)'s share price gapped down prior to trading on Thursday . The stock had previously closed at $127.01, but opened at $115.53. Applied Optoelectronics shares last traded at $109.8270, with a volume of 5,955,813 shares traded.

Analyst Upgrades and Downgrades

AAOI has been the subject of several recent analyst reports. B. Riley Financial upgraded shares of Applied Optoelectronics from a "sell" rating to a "neutral" rating and set a $54.00 target price for the company in a research note on Friday, February 27th. Wall Street Zen upgraded Applied Optoelectronics from a "sell" rating to a "hold" rating in a report on Saturday, February 28th. Northland Securities reissued a "market perform" rating and issued a $55.00 price objective on shares of Applied Optoelectronics in a research report on Friday, February 27th. Needham & Company LLC boosted their target price on Applied Optoelectronics from $43.00 to $80.00 and gave the stock a "buy" rating in a research note on Friday, February 27th. Finally, Weiss Ratings reaffirmed a "sell (d-)" rating on shares of Applied Optoelectronics in a research report on Wednesday, January 21st. Three research analysts have rated the stock with a Buy rating, three have assigned a Hold rating and one has issued a Sell rating to the stock. According to data from MarketBeat.com, Applied Optoelectronics has an average rating of "Hold" and a consensus target price of $52.80.

Applied Optoelectronics Stock Down 12.6%

The firm has a market capitalization of $8.35 billion, a price-to-earnings ratio of -170.88 and a beta of 3.20. The company has a debt-to-equity ratio of 0.18, a current ratio of 2.63 and a quick ratio of 1.91. The business has a fifty day moving average price of $53.08 and a two-hundred day moving average price of $37.32.

Applied Optoelectronics (NASDAQ:AAOI - Get Free Report) last released its earnings results on Thursday, February 26th. The semiconductor company reported ($0.01) EPS for the quarter, topping analysts' consensus estimates of ($0.12) by $0.11. Applied Optoelectronics had a negative return on equity of 5.29% and a negative net margin of 8.39%.The firm had revenue of $134.27 million during the quarter, compared to the consensus estimate of $131.56 million. During the same quarter in the previous year, the company posted ($0.02) earnings per share. The company's revenue was up 33.9% compared to the same quarter last year. Applied Optoelectronics has set its Q1 2026 guidance at -0.090-0.000 EPS. On average, equities analysts expect that Applied Optoelectronics, Inc. will post -1.18 earnings per share for the current year.

Insider Activity at Applied Optoelectronics

In other Applied Optoelectronics news, Director William H. Yeh sold 15,000 shares of the company's stock in a transaction on Monday, March 9th. The shares were sold at an average price of $105.76, for a total value of $1,586,400.00. Following the sale, the director directly owned 238,819 shares of the company's stock, valued at approximately $25,257,497.44. This represents a 5.91% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this link. Also, insider David C. Kuo sold 17,467 shares of the stock in a transaction dated Wednesday, February 11th. The stock was sold at an average price of $50.17, for a total value of $876,319.39. Following the sale, the insider directly owned 111,663 shares in the company, valued at $5,602,132.71. This represents a 13.53% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. Insiders sold a total of 273,433 shares of company stock valued at $23,341,962 over the last ninety days. Corporate insiders own 4.50% of the company's stock.

Institutional Inflows and Outflows

Large investors have recently bought and sold shares of the stock. Vanguard Group Inc. grew its stake in shares of Applied Optoelectronics by 7.7% during the 4th quarter. Vanguard Group Inc. now owns 4,982,660 shares of the semiconductor company's stock worth $173,696,000 after purchasing an additional 358,090 shares during the period. Invesco Ltd. boosted its holdings in Applied Optoelectronics by 5,208.9% during the fourth quarter. Invesco Ltd. now owns 3,512,309 shares of the semiconductor company's stock worth $122,439,000 after buying an additional 3,446,150 shares in the last quarter. Price T Rowe Associates Inc. MD grew its position in Applied Optoelectronics by 5,321.6% during the fourth quarter. Price T Rowe Associates Inc. MD now owns 2,229,757 shares of the semiconductor company's stock valued at $77,730,000 after buying an additional 2,188,630 shares during the period. Hawk Ridge Capital Management LP increased its holdings in Applied Optoelectronics by 106.2% in the fourth quarter. Hawk Ridge Capital Management LP now owns 1,700,900 shares of the semiconductor company's stock valued at $59,293,000 after buying an additional 875,903 shares in the last quarter. Finally, Morgan Stanley raised its position in shares of Applied Optoelectronics by 157.1% in the fourth quarter. Morgan Stanley now owns 1,699,855 shares of the semiconductor company's stock worth $59,257,000 after acquiring an additional 1,038,775 shares during the period. 61.70% of the stock is owned by institutional investors and hedge funds.

About Applied Optoelectronics

Applied Optoelectronics, Inc develops and manufactures high-speed fiber-optic networking products designed to support the growing bandwidth demands of data centers, telecommunications carriers and internet content providers. The company's core offerings include pluggable optical transceiver modules, transponders and optical components that enable data transmission at rates ranging from 1G to 400G. These products are used to facilitate long-haul, metro and intra-data center connectivity, addressing the need for scalable, low-latency and energy-efficient solutions in modern network infrastructures.

The company's product portfolio spans small-form factor pluggable modules such as SFP+, QSFP+ and QSFP28 units, as well as more advanced form factors like CFP2 and OSFP for ultra-high-speed applications.

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