Applied Optoelectronics (AAOI) stock plummeted 7.04% during intraday trading on Thursday, extending a recent pullback.
The sharp decline is primarily attributed to significant profit-taking pressure following a rally of over 15% across two prior sessions. This earlier surge was driven by renowned investor Serenity publicly endorsing AAOI as a top U.S. photonics pick and the company's Xinbei factory securing production approval from a hyperscale customer for 800G optical transceiver capacity.
Additionally, the broader Communication Equipment sector experienced a severe selloff, with peers like Ciena, Arista Networks, and Lumentum also declining sharply, reflecting bearish sector sentiment that further weighed on AAOI. Company-specific factors, including a Q1 EPS loss of $0.12 that missed market expectations and a $600 million ATM equity offering plan, added to the negative pressure.