What happened

Shares of Applied Optoelectronics (NASDAQ:AAOI) fell 14.4% in January, according to data from S&P Global Market Intelligence. One bearish analyst note did most of the damage.

So what

On Jan. 9, analyst firm Rosenblatt said that Applied Optoelectronics seemed to be losing some business to optical components rival InnoLight in several key accounts, including largest customer Amazon.com (NASDAQ:AMZN) and global computing giant Facebook (NASDAQ:FB). Amazon alone accounted for more than half of Applied Optoelectronics' data center revenues in November's third-quarter report, so any share loss there could do terrible damage to the company's top and bottom lines.

A bundle of lit fiber-optic cables in front of dark clouds and a thunderstrike.

Image source: Getty Images, edited by the author.

Now what

One analyst report isn't necessarily the gospel truth, of course. We'll know more next week, as Applied Optoelectronics is set to report fourth-quarter results on Feb. 22. Until then, I'd note that the stock is trading at just 7.1 times trailing earnings. It's easy to imagine a strong bounce for this troubled stock if -- if -- Applied Optoelectronics can prove the doubters wrong.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.