Applied Optoelectronics Inc. (NASDAQ:AAOI) shares are retreating Tuesday, giving back some ground after Monday’s blistering 22% one-day surge.

What Sparked Monday’s Run

Monday’s surge traced directly back to last week’s blowout fourth-quarter earnings report, released Feb. 26. The company posted an adjusted loss of 1 cent per share, better than Wall Street’s consensus forecast of an 11-cent loss. Revenue surged approximately 34% year over year to $134.3 million, a record quarter, beating analyst estimates handily.

Management guided first-quarter revenue of $150 million to $165 million, topping consensus expectations of roughly $145 million.

The company also projected a non-GAAP net loss of no worse than 9 cents per share, with a path to breakeven as it scales next-generation datacenter products.

Analyst Upgrades Followed The Print

The stock carries a Buy Rating with an average price target of $63.80.

Recent analyst moves include:

• Rosenblatt: Buy (Raises Target to $125.00) (Feb. 27)
• Needham: Buy (Raises Target to $80.00) (Feb. 27)
• B. Riley Securities: Upgraded to Neutral (Raises Target to $54.00) (Feb. 27)

Short Interest

Short interest fell from 11.57 million to 10.62 million shares in the most recent reporting period, representing 16.11% of the float. At the recent average daily volume of 5.09 million shares, shorts would need roughly 2.09 days to cover.

Technical Analysis

Over the past year, Applied Optoelectronics has seen an impressive rally, with its stock price increasing by 478.50%. The stock is currently trading significantly above its key moving averages, which signals strong bullish momentum.

Specifically, it is 79.1% above its 20-day Simple Moving Average (SMA) and 160.3% above its 100-day SMA. Despite today’s drop, the stock remains closer to its 52-week high of $110.00 than its low of $9.71.

The technical indicators further illustrate this strength, with the Relative Strength Index at a high 84.84.

AAOI Price Action: Applied Optoelectronics shares were down 11.87% at $90.34 at the time of publication on Tuesday, according to Benzinga Pro data.

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