Applied Optoelectronics, Inc. (AAOI) Stock: Here’s Why It’s Down

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Applied Optoelectronics, Inc. (AAOI) is headed up in the market in today’s trading session. The stock, one that is focused on the tech industry, is currently trading at $9.12 after tumbling -5.00% so far in today’s session. As it relates to technology companies, there are several factors that have the potential to generate movement in the market. One of the most common is news. Here are the most recent stories surrounding AAOI:

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May-28-19 04:05PM Applied Optoelectronics, Inc. and Innovium Announce Interoperability of 400G SR8 and 400G DR4 2km transceivers breakout to 100G FR with TERALYNX Switch
04:05PM Applied Optoelectronics to Participate in Upcoming Investor Conference
May-16-19 10:04AM Did Applied Optoelectronics, Inc. (NASDAQ:AAOI) Insiders Sell Shares?
May-14-19 07:45AM NASDAQ: AAOI Investor Notice: Update in Lawsuit against Applied Optoelectronics, Inc. announced by Shareholders Foundation
May-09-19 09:55PM Edited Transcript of AAOI earnings conference call or presentation 8-May-19 8:30pm GMT

However, any time investors are making a decision to invest, prospective investors should take a look at far more than news, especially in the ever evolving technology sector. Here’s what’s happing when it comes to Applied Optoelectronics, Inc..

Performance Trends That We’ve Seen From AAOI

Although a single session decline, like the move that we’re seeing from Applied Optoelectronics, Inc. might lead to fear in some investors, that alone shouldn’t be the reason for a decision to, or not to, buy a company’s stock. It’s always a good idea to dig into trends beyond a single trading day. In the case of AAOI, here are the returns on investment that we have seen:

  • Past 7 Days – Throughout the past 7 days, AAOI has generated a change in price amounting to -0.76%.
  • Monthly – The monthly performance from Applied Optoelectronics, Inc. comes to -14.85%.
  • Past 3 Months – Throughout the past quarter, the stock has produced a ROI that comes to -32.39%
  • Past 6 Months – In the previous six months, investors have seen a change that amounts to -52.35% from the stock.
  • This Year So Far – Since the open of this year AAOI has resulted in a return on investment of -40.89%.
  • Annually – Lastly, in the last full year, we’ve seen a change in the amount of -79.89% out of AAOI. In this period of time, the stock has traded at a high of -81.87% and a low price of 6.53%.

Crucial Ratios

Digging into various ratios having to do with a stock generally gives investors a look of how dangerous and/or potentially profitable a an investment option may be. Here are a few of the most important ratios to think about when looking at AAOI.

Short Ratio – The short ratio is a tool that is used to measure the amount of short interest. The higher this short ratio, the more investors believe that the value of the stock is headed for declines. Across the sector, strong tech stocks can come with a lower short ratio. However, we tend to see quite a few short squeezes in the space. Nonetheless, when it comes to Applied Optoelectronics, Inc., the stock’s short ratio amounts to 11.85.

Quick & Current Ratios – The quick and current ratios are ratios that dive into liquidity. Basically, they measure whether or not a company can pay its debts when they mature with only quick assets or current assets. In the tech space, several companies rely on the continuation of investor support as they work to bring new technologies to market, the quick and current ratios can seem upsetting. However, some gems in the technology industry come with great quick and current ratios. In terms of AAOI, the quick and current ratios total up to 1.80 and 3.10 respectively.  

Book To Share Value – The book to share value compares the value of assets owned by the company to the share price. when it comes to Applied Optoelectronics, Inc., that ratio is 16.29.

Cash To Share Value – The cash to share value comparison compares the total amount of cash the company has on hand to the price of the company’s stock. In this case, the cash to share value ratio comes to 0.

Is Big Money Interested in Applied Optoelectronics, Inc.?

An interesting fact that I have come to understand so far in my short period in existence has been that good investors tend to follow big money investors. Usually, investors that want to keep the risk down will keep an eye on trades made by institutions as well as insiders. So, where is the big money as it relates to AAOI? Here’s what’s happening:

  • Institutional Investors – As it stands now, institutions hold 64.80% of AAOI. Nonetheless, it’s important to note that institutional ownership has moved in the amount of 5.81% throughout the past 3 months.
  • Insider Holdings – When it comes to insiders, insiders of the company currently own 5.30% of Applied Optoelectronics, Inc.. Insider ownership of the company has changed by -0.19% in the past quarter.

What Analysts Think About Applied Optoelectronics, Inc.

While it’s not a smart idea to blindly follow the thoughts of analysts, it is a good idea to consider their analysis when validating your own thoughts when it comes to making an investment decision in the technology sector. Below you’ll find the most recent moves that we’ve seen from analysts when it comes to AAOI.

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Feb-22-19 Downgrade Raymond James Outperform → Mkt Perform
Feb-22-19 Downgrade Needham Buy → Hold
Feb-22-19 Downgrade DA Davidson Buy → Neutral $42 → $16
Feb-12-19 Reiterated Rosenblatt Sell $15 → $10
Nov-08-18 Reiterated B. Riley FBR Neutral $22 → $19

Financial Results And Expectations

At the moment, analysts are expecting that throughout the full year, earnings per diluted share will come in at $-0.27. In the current quarter, analysts see the company producing earnings in the amount of $-0.37. Over the last 5 years, AAOI has generated revenue in the amount of $27.80% with earnings coming in at 33.20%. On a quarter over quarter basis, earnings have seen movement of -597.20% and revenue has seen movement of -19.20%.

A Look At Share Counts

Traders and investors tend to have an interest in the counts of shares both outstanding and available. When it comes to Applied Optoelectronics, Inc., currently there are 19.52M and there is a float of 18.83M. These data mean that of the total of 19.52M shares of AAOI currently in existence today, 18.83M are available to trade hands in the public realm.

I also find it important to pay attention to the short percentage of the float. Think about it, when a large percentage of the float is sold short, the overall opinion in the market is that the company is going to fall. When it comes to AAOI, the percentage of the float that is shorted is 42.24%. In general, concerning short percent of the float would be considered to be anything over 40%. Nonetheless, I have seen that a short ratio over 26% is likely a play that comes with hefty risk.

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