Why Applied Optoelectronics Stock Sank Today

Stock market players weren't seeing great value in Applied Optoelectronics (NASDAQ: AAOI) stock as the trading week came to a close. The company's shares fell by almost 2% on Friday on the back of an earnings report that left investors wanting. That was on a day when the S&P 500 index ticked up slightly by 0.1%.

Challenges in a key segment

Applied Optoelectronics, which focuses on optical components for hardware such as that used in data centers, published its third-quarter results Friday morning.

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Revenue for the period nearly doubled on a year-over-year basis, landing at slightly over $118.6 million from Q3 2024's $65 million. Analysts, however, were more or less expecting such a leap, as their collective estimate was just under $118.7 million.

The story was a bit different on the bottom line, as Applied's net loss not according to generally accepted accounting principles (GAAP) narrowed to $5.4 million ($0.09 per share) from the year-ago deficit of $8.8 million. The consensus pundit forecast, however, was for a much narrower $0.01-per-share shortfall.

Applied Optoelectronics said in the earnings release that revenue in the high-growth data center segment was negatively affected by hiccups in shipping and receiving.

Guidance misses

Applied also missed on its current (fourth-quarter) adjusted net loss and revenue guidance.

The company expects to book a deficit of $0.04 to $0.13 per share for the frame, which is notably below the average analyst estimate of a $0.03-per-share profit. Similarly, management's estimate of the quarter's revenue -- $124 million to $140 million -- doesn't quite reach the prognosticator consensus of nearly $145 million.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.