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

Applied Optoelectronics, Inc. (NASDAQ:AAOI)’s share price gapped down before the market opened on Wednesday . The stock had previously closed at $113.90, but opened at $110.12. Applied Optoelectronics shares last traded at $116.6950, with a volume of 4,670,081 shares trading hands.

Analyst Upgrades and Downgrades

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

Applied Optoelectronics Trading Down 15.0%

The company has a current ratio of 2.63, a quick ratio of 1.91 and a debt-to-equity ratio of 0.18. The firm has a market cap of $7.31 billion, a price-to-earnings ratio of -149.56 and a beta of 3.20. The company has a fifty day moving average price of $66.96 and a 200-day moving average price of $42.93.

Applied Optoelectronics (NASDAQ:AAOI) last announced its quarterly earnings results on Thursday, February 26th. The semiconductor company reported ($0.01) earnings per share for the quarter, beating the consensus estimate 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 company had revenue of $134.27 million during the quarter, compared to analysts’ expectations of $131.56 million. During the same period last year, the business earned ($0.02) earnings per share. Applied Optoelectronics’s quarterly revenue was up 33.9% on a year-over-year basis. Applied Optoelectronics has set its Q1 2026 guidance at -0.090-0.000 EPS. As a group, research analysts expect that Applied Optoelectronics, Inc. will post -1.18 EPS for the current year.

Insider Activity

In related news, insider Shu-Hua (Joshua) Yeh sold 50,000 shares of the business’s stock in a transaction on Monday, March 9th. The shares were sold at an average price of $97.10, for a total value of $4,855,000.00. Following the completion of the transaction, the insider directly owned 322,051 shares in the company, valued at $31,271,152.10. The trade was a 13.44% decrease in their position. The transaction was disclosed in a document filed with the SEC, which is available at the SEC website. Also, insider David C. Kuo sold 29,000 shares of the stock in a transaction on Thursday, March 19th. The stock was sold at an average price of $100.13, for a total transaction of $2,903,770.00. Following the sale, the insider directly owned 82,663 shares in the company, valued at $8,277,046.19. This trade represents a 25.97% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Over the last 90 days, insiders sold 326,333 shares of company stock worth $29,392,957. 4.50% of the stock is currently owned by corporate insiders.

Institutional Trading of Applied Optoelectronics

A number of institutional investors and hedge funds have recently made changes to their positions in the business. Invesco Ltd. increased its holdings in Applied Optoelectronics by 5,208.9% in the 4th quarter. Invesco Ltd. now owns 3,512,309 shares of the semiconductor company’s stock worth $122,439,000 after acquiring an additional 3,446,150 shares in the last quarter. Price T Rowe Associates Inc. MD grew its holdings in Applied Optoelectronics by 5,321.6% in the 4th 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 in the last quarter. Morgan Stanley grew its holdings 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 valued at $59,257,000 after purchasing an additional 1,038,775 shares during the period. Hawk Ridge Capital Management LP grew its stake in shares of Applied Optoelectronics by 106.2% in the 4th 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 during the period. Finally, Artemis Investment Management LLP purchased a new position in Applied Optoelectronics in the fourth quarter worth approximately $26,923,000. 61.70% of the stock is currently owned by hedge funds and other institutional investors.

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.