Applied Optoelectronics (AAOI) Stock: Takes A Dive On Weak Q3 Expectations

Applied Optoelectronics Inc (NASDAQ: AAOI) is having an incredibly rough start to the trading session this morning, and for good reason. The company announced preliminary Q3 results that caused concerns among investors. Of course, our partners at Trade Ideas were the first to alert us to the declines. Currently (9:41), AAOI is trading at $47.79 per share after a loss of $11.05 per share or 18.78% thus far today.

AAOI Falls Hard On Q3 Expectations

As mentioned above, Applied Optoelectronics is having an incredibly rough day in the market today after the company announced preliminary Q3 results. Unfortunately, these results simply didn’t match expectations. Here’s what the company is expecting to see:

  • non-GAAP EPS – On a non-GAAP basis, AAOI said that it is expecting for earnings to come in the range between $1.04 per share and $1.09 per share. This is a far stretch from the company’s previous guidance for the quarter, putting earnings in the range between $1.30 per share and $1.43 per share. Not to mention, it’s a big miss with regard to analyst expectations of earnings coming in at $1.31 per share.
  • Revenue – Revenue is another area where the company isn’t likely to perform as well as expected. During the quarter, AAOI said that it is expecting to generate revenue in the range between $88 million and $89 million. Previous revenue guidance suggested that the company would generate between $107 million and $115 million. Not to mention, analysts were expecting that the company would generate revenue in the amount of $111.6 million.

Ultimately, AAOI said that the decline in expectations is the result of the loss of a large customer. Nonetheless, investors feel as though they have been misled by management and that projections with regard to Q3 could have been more accurate. So, how did management explain the issue away? Well, here’s what they had to say:

[The reduced expectations are the result of] lower than expected sales to one of our large data center customers… Although we are disappointed with these preliminary results, we continue to feel good about our leadership position in advanced optics and remain optimistic based on the customer traction we’re seeing with our 100G products, especially our 100G CWDM transceivers.”

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What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will continue to keep a close eye on AAOI. In particular, we’ll be following the story surrounding the company to see if growth starts following the dismal 3rd quarter expectations. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!

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