Why Applied Optoelectronics Stock Fell 25.1% in December

Between the market's plunge and pessimistic analysts, the fiber-optic networking specialist ended 2018 on a low note.

Steve Symington
Steve Symington
Jan 8, 2019 at 6:05PM
Technology and Telecom

What happened

Shares of Applied Optoelectronics (NASDAQ:AAOI) declined 25.1% in December, according to data from S&P Global Market Intelligence, as the broader markets pulled back, and analysts offered pessimistic views of the fiber-optic networking products leader.

On the former, note that the S&P 500 index plunged 9% last month on fears of slowing global economic growth, political strife, and concerns over increasing regulation of the tech sector. It wasn't terribly surprising, then, to see many tech stocks decline in December despite a lack of company-specific news.

Check out the latest Applied Optoelectronics earnings call transcript.

Stock market data and arrow chart indicating losses

Image source: Getty Images.

So what

But Wall Street didn't do Applied Optoelectronics any favors. Piper Jaffray analyst James Fish, for one, weighed in on Dec. 18 to argue that Cisco Systems(NASDAQ:CSCO) $660 million acquisition of silicon photonics leader Luxterra will be "mostly negative" for Applied Optoelectronics, since the deal reduces its total addressable market and threatens to drive more-aggressive industry pricing. B. Riley analyst Dave Kang echoed that sentiment the same day, while reiterating his own neutral rating on Applied Optoelectronics' stock.

Now what

To be clear, there was no material news from Applied Optoelectronics that may have otherwise influenced its steep drop last month. But considering the company has had no qualms with revising its financial guidance in the face of adversity if need be, you can be sure investors will be watching closely for any preliminary updates to its most recent outlook between now and its fourth-quarter report early next month.