Applied Optoelectronics Stock Drop Looks Sharp, But How Deep Can It Go?
Applied Optoelectronics (AAOI) stock is down 9.3% in a day. The recent slide reflects renewed concerns over AAOI’s lower Q4 revenue outlook, datacenter shipment delays, and rising operational costs, but sharp drops like this often raise a tougher question: is the weakness temporary, or a sign of deeper cracks in the story?
Before judging its downturn reslience, let’s look at where Applied Optoelectronics stands today.
- Size: Applied Optoelectronics is a $2.4 Bil company with $422 Mil in revenue currently trading at $37.17.
- Fundamentals: Last 12 month revenue growth of 101.2% and operating margin of -10.6%.
- Liquidity: Has Debt to Equity ratio of 0.1 and Cash to Assets ratio of 0.14
- Valuation: Applied Optoelectronics stock is currently trading at P/E multiple of -15.1 and P/EBIT multiple of -15.5
- Has one instance since 2010 where it dipped >30% in < 30 days and subsequently returned -2.1% within a year. See AAOI Dip Buy Analysis.
These metrics point to a Moderate operational performance, alongside High valuation – making the stock Unattractive. For details, see Buy or Sell AAOI Stock
That brings us to the key consideration for investors worried about this fall: how resilient is AAOI stock if markets turn south? This is where our downturn resilience framework comes in. Suppose AAOI stock falls another 20-30% to $26 – can investors comfortably hold on? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns, based on (a) how much the stock fell and, (b) how quickly it recovered. Below, we dive deeper into each such downturn.
- The Smart Way to Own ANET: Collect 10% Before You Even Buy
- Triggers That Could Ignite the Next Rally In Meta Platforms Stock
- Can Coca-Cola Stock Withstand These Pressures?
- Fiserv Stock: Strong Cash Flow Poised for a Re-Rating?
- Comcast Stock Pullback: A Chance to Ride the Uptrend
- Has Accenture Stock Quietly Become a Value Opportunity?
2022 Inflation Shock
- AAOI stock fell 88.3% from a high of $12.83 on 16 February 2021 to $1.50 on 11 July 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 10 August 2023
- Since then, the stock increased to a high of $44.03 on 4 December 2024 , and currently trades at $37.17
| AAOI | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -88.3% | -25.4% |
| Time to Full Recovery | 395 days | 464 days |
2020 Covid Pandemic
- AAOI stock fell 64.7% from a high of $15.60 on 15 January 2020 to $5.50 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 3 August 2020
| AAOI | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -64.7% | -33.9% |
| Time to Full Recovery | 138 days | 148 days |
2018 Correction
- AAOI stock fell 91.5% from a high of $99.61 on 1 August 2017 to $8.50 on 27 August 2019 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
| AAOI | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -91.5% | -19.8% |
| Time to Full Recovery | Not Fully Recovered | 120 days |
Feeling jittery about AAOI stock? Consider portfolio approach.
A Multi Asset Portfolio Gives You Safer Smarter Growth
Individual stocks can soar or tank but multi asset exposure steadies the ride. A spread out portfolio captures upside while limiting the damage from any one market.
The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices