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.
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 |
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