Serenity Bullish on AAOI, Criticizes Timing of $600 Million Offering

On August 24, Serenity expressed a continued bullish outlook on the optical communications stock Applied Optoelectronics (AAOI), but criticized its At-the-Market (ATM) financing strategy. Serenity pointed out that AAOI is overly reliant on ATM offerings for financing and believes that the timing of the approximately $600 million offering is inappropriate, suggesting it should have been launched after the completion of the 1.6T optical module qualification, which is expected to be finalized in the coming weeks. AAOI's stock price fell from $220 to $130 before the offering, potentially leading to short-term structural selling pressure and ongoing suppression. Nevertheless, Serenity remains heavily invested in AAOI, believing that the company's limited production capacity and high demand visibility make it more attractive compared to POET. AAOI's revenue in the second quarter increased by 86% year-over-year, exceeding expectations, but the guidance for the third quarter is weak, and the offering further exacerbates market concerns regarding short-term valuations and liquidity.

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