Applied Optoelectronics (NASDAQ:AAOI) Trading Down 8.9% - Time to Sell?

Key Points

• AAOI shares fell 8.9% to about $141.12, with trading volume significantly below the stock’s average. The decline brought the stock close to MarketBeat’s average analyst price target of $139.40.
• Analyst sentiment is mixed: three firms rate the stock Buy, two Hold and one Sell. Price targets range from $178 to $220, although Needham recently lowered its target to $190.
• Applied Optoelectronics exceeded quarterly earnings and revenue expectations, reporting $0.06 EPS and $191.92 million in revenue, up 86.3% year over year. However, the company remains unprofitable, while insiders have sold approximately $55.7 million of shares over the past 90 days.

Applied Optoelectronics, Inc. (NASDAQ:AAOI - Get Free Report) shares traded down 8.9% during trading on Tuesday . The stock traded as low as $141.80 and last traded at $141.1220. Approximately 2,499,625 shares changed hands during trading, a decline of 77% from the average daily volume of 10,700,515 shares. The stock had previously closed at $154.89.

Analysts Set New Price Targets

A number of brokerages have weighed in on AAOI. Rosenblatt Securities restated a "buy" rating and issued a $220.00 price objective on shares of Applied Optoelectronics in a report on Friday, August 7th. Weiss Ratings reiterated a "sell (d-)" rating on shares of Applied Optoelectronics in a research report on Tuesday, July 7th. B. Riley Financial reissued a "neutral" rating on shares of Applied Optoelectronics in a research note on Friday, August 7th. Raymond James Financial reissued an "outperform" rating and issued a $178.00 price target on shares of Applied Optoelectronics in a research note on Tuesday, August 11th. Finally, Needham & Company LLC lowered their price target on shares of Applied Optoelectronics from $220.00 to $190.00 and set a "buy" rating on the stock in a research report on Friday, August 7th. Three investment analysts have rated the stock with a Buy rating, two have issued a Hold rating and one has given a Sell rating to the stock. According to MarketBeat, the company has an average rating of "Hold" and an average target price of $139.40.

Applied Optoelectronics Stock Performance

The stock has a market cap of $11.45 billion, a price-to-earnings ratio of -174.41 and a beta of 3.76. The company has a debt-to-equity ratio of 0.12, a current ratio of 2.78 and a quick ratio of 2.13. The firm has a fifty day moving average of $131.17 and a 200 day moving average of $123.06.

Applied Optoelectronics (NASDAQ:AAOI - Get Free Report) last released its quarterly earnings data on Thursday, August 6th. The semiconductor company reported $0.06 earnings per share for the quarter, topping analysts' consensus estimates of $0.02 by $0.04. The company had revenue of $191.92 million for the quarter, compared to analyst estimates of $190.48 million. Applied Optoelectronics had a negative return on equity of 1.98% and a negative net margin of 9.57%.The firm's revenue for the quarter was up 86.3% compared to the same quarter last year. During the same quarter in the previous year, the company posted ($0.16) earnings per share. Applied Optoelectronics has set its Q3 2026 guidance at 0.110-0.260 EPS. As a group, sell-side analysts forecast that Applied Optoelectronics, Inc. will post 0.6 EPS for the current year.

Insider Buying and Selling at Applied Optoelectronics

In other news, insider David C. Kuo sold 29,227 shares of the business's stock in a transaction dated Friday, June 12th. The shares were sold at an average price of $166.53, for a total transaction of $4,867,172.31. Following the transaction, the insider owned 149,078 shares of the company's stock, valued at approximately $24,825,959.34. The trade was a 16.39% decrease in their position. The sale was disclosed in a legal filing with the SEC, which can be accessed through this link. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CFO Stefan J. Murry sold 33,000 shares of the company's stock in a transaction dated Friday, June 12th. The shares were sold at an average price of $166.53, for a total transaction of $5,495,490.00. Following the completion of the sale, the chief financial officer directly owned 384,576 shares of the company's stock, valued at $64,043,441.28. This represents a 7.90% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Over the last 90 days, insiders have sold 323,204 shares of company stock worth $55,700,961. Corporate insiders own 3.80% of the company's stock.

Hedge Funds Weigh In On Applied Optoelectronics

Several institutional investors and hedge funds have recently bought and sold shares of the company. Allworth Financial LP grew its stake in shares of Applied Optoelectronics by 1,923.7% in the 4th quarter. Allworth Financial LP now owns 769 shares of the semiconductor company's stock valued at $27,000 after buying an additional 731 shares during the period. Comerica Bank purchased a new stake in shares of Applied Optoelectronics during the 3rd quarter valued at approximately $28,000. Northwestern Mutual Wealth Management Co. lifted its holdings in Applied Optoelectronics by 166.7% in the fourth quarter. Northwestern Mutual Wealth Management Co. now owns 1,200 shares of the semiconductor company's stock valued at $42,000 after acquiring an additional 750 shares during the last quarter. EFG International AG acquired a new position in Applied Optoelectronics in the second quarter valued at approximately $44,000. Finally, Persistent Asset Partners Ltd purchased a new position in Applied Optoelectronics in the second quarter worth approximately $47,000. 61.70% of the stock is currently owned by institutional investors and hedge funds.

Applied Optoelectronics Company Profile

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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