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Why Shares of Applied Optoelectronics Jumped Today

By Timothy Green – Aug 7, 2020 at 12:02PM

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The fiber-optic networking company is seeing strong demand from its data center and telecom clients.

What happened

Shares of Applied Optoelectronics (AAOI -1.38%) rose on Friday after the fiber-optic networking provider reported its second-quarter results. Soaring revenue easily topped analysts' expectations, and the company reported a smaller-than-expected net loss. The stock was up by about 11.2% at 11:52 a.m. EDT.

So what

For the period, Applied Optoelectronics reported revenue of $65.2 million, up 50.2% year over year, and about $7.9 million higher than the average analyst estimate. Demand from its data center customers was strong, and revenue in the telecom segment was driven to record levels by the construction of 5G networks.

A rising chart.

Image source: Getty Images.

Data center revenue rose 65% year over year to $52.5 million, accounting for the bulk of the company's sales. The telecom business generated just $6.2 million of revenue, but that was up approximately 280% from the prior-year period.

Non-GAAP (adjusted) earnings per share came in at a loss of $0.24, slightly better than the $0.26 loss the company delivered in the prior-year period, and $0.01 better than analysts' expectations. The company lost $0.89 per share on a GAAP basis, a far worse result than the $0.57 per share loss it booked in Q2 2019.

Now what

For the third quarter, Applied Optoelectronics expects to report revenue in the $76 million to $83 million range, and a non-GAAP net loss per share of $0.03 to $0.20. "Looking ahead, we expect this momentum to continue into the third quarter driven by similar trends in increased demand from both our data center and telecom end markets," said CEO Thompson Lin.

Including Friday morning's rally, shares of Applied Optoelectronics are up by about 40% year to date. The tech stock has more than tripled from its 52-week low, which was reached during the depths of the pandemic-driven sell-off in March.

Timothy Green 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.

Stocks Mentioned

Applied Optoelectronics Stock Quote
Applied Optoelectronics
AAOI
$2.15 (-1.38%) $0.03

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