Applied Optoelectronics (NASDAQ:AAOI) Stock Falls 12.8% - Should You Sell?

Key Points

• Applied Optoelectronics shares fell 12.8% to $69.05 on unusually heavy trading volume, well below its 50-day and 200-day moving averages.
• Analyst sentiment is mixed: the stock has an average “Hold” rating and a $143 average price target, with recent target reductions from B. Riley and Needham but a $220 target maintained by Rosenblatt.
• The company recently beat quarterly earnings and revenue estimates, with revenue up 86.3% year over year, but it remains unprofitable and insiders have sold roughly $6.6 million of shares over the past quarter.

Applied Optoelectronics, Inc. (NASDAQ:AAOI - Get Free Report) dropped 12.8% on Friday. The company traded as low as $65.77 and last traded at $69.05. Approximately 17,012,821 shares traded hands during mid-day trading, an increase of 63% from the average session volume of 10,434,412 shares. The stock had previously closed at $79.19.

Analyst Upgrades and Downgrades

AAOI has been the topic of several recent research reports. Rosenblatt Securities restated a "buy" rating and issued a $220.00 price objective on shares of Applied Optoelectronics in a research report on Friday, August 7th. Weiss Ratings upgraded Applied Optoelectronics from a "sell (e+)" rating to a "sell (d-)" rating in a research report on Wednesday, October 21st. B. Riley Financial cut their target price on shares of Applied Optoelectronics from $109.00 to $92.00 and set a "neutral" rating for the company in a research note on Thursday, October 15th. Wall Street Zen upgraded shares of Applied Optoelectronics from a "sell" rating to a "hold" rating in a report on Saturday, August 8th. Finally, Needham & Company LLC decreased their price target on shares of Applied Optoelectronics from $190.00 to $170.00 and set a "buy" rating on the stock in a research note on Tuesday. Three investment analysts have rated the stock with a Buy rating, two have given a Hold rating and one has issued a Sell rating to the company. According to MarketBeat, Applied Optoelectronics has an average rating of "Hold" and an average target price of $143.00.

Applied Optoelectronics Price Performance

The company has a 50-day moving average of $99.96 and a two-hundred day moving average of $112.57. The stock has a market capitalization of $5.84 billion, a PE ratio of -88.53 and a beta of 3.85. The company has a debt-to-equity ratio of 0.12, a current ratio of 2.78 and a quick ratio of 2.13.

Applied Optoelectronics (NASDAQ:AAOI - Get Free Report) last posted its quarterly earnings data on Thursday, August 6th. The semiconductor company reported $0.06 EPS for the quarter, beating analysts' consensus estimates of $0.02 by $0.04. The company had revenue of $191.92 million during the quarter, compared to the consensus estimate of $190.48 million. Applied Optoelectronics had a negative net margin of 9.57% and a negative return on equity of 1.98%. The company's quarterly revenue was up 86.3% compared to the same quarter last year. During the same quarter in the prior year, the company posted ($0.16) EPS. Applied Optoelectronics has set its Q3 2026 guidance at 0.110-0.260 EPS. Sell-side analysts predict that Applied Optoelectronics, Inc. will post 0.55 EPS for the current fiscal year.

Insider Activity at Applied Optoelectronics

In other Applied Optoelectronics news, insider Hung-Lun Chang sold 32,172 shares of the business's stock in a transaction that occurred on Tuesday, September 8th. The shares were sold at an average price of $110.21, for a total transaction of $3,545,676.12. Following the completion of the sale, the insider directly owned 249,276 shares in the company, valued at $27,472,707.96. The trade was a 11.43% decrease in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available through this hyperlink. Also, CFO Stefan Murry sold 4,000 shares of the business's stock in a transaction that occurred on Monday, October 12th. The stock was sold at an average price of $102.87, for a total transaction of $411,480.00. Following the sale, the chief financial officer owned 363,168 shares of the company's stock, valued at approximately $37,359,092.16. This represents a 1.09% 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. Over the last quarter, insiders have sold 56,887 shares of company stock worth $6,581,484. Company insiders own 3.80% of the company's stock.

Institutional Trading of Applied Optoelectronics

Institutional investors have recently added to or reduced their stakes in the business. BlackRock Inc. purchased a new position in Applied Optoelectronics in the second quarter valued at about $955,672,000. William Blair Investment Management LLC acquired a new stake in Applied Optoelectronics during the 2nd quarter valued at approximately $74,703,000. Renaissance Technologies LLC purchased a new stake in Applied Optoelectronics during the 1st quarter worth approximately $47,817,000. Bank of America Corp DE purchased a new stake in Applied Optoelectronics during the 2nd quarter worth approximately $33,712,000. Finally, Bank of New York Mellon Corp acquired a new position in shares of Applied Optoelectronics in the 2nd quarter valued at approximately $32,567,000. 61.70% of the stock is owned by hedge funds and other institutional investors.

Applied Optoelectronics Company Profile

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.