Serenity: Still Bullish on AAOI But Unfavorable $600 Million Market Price Offering Timing, Capacity Constraints, and Demand Visibility Provide Holding Conviction

BlockBeats News, August 24th. Serenity explicitly stated its bullish view on the optical communication concept stock Applied Optoelectronics (AAOI), but criticized its ATM (At-the-Market) stock issuance financing. "I don't like AAOI's excessive reliance on ATM issuance for financing. This principle has previously applied to IREN and POET, and AAOI will not be treated differently." However, the most pointed criticism this time was focused on the timing choice. The $600 million ATM should have been launched after the completion of the 1.6T optical module qualification, which is expected to occur in the next few weeks, or through a convertible bond structure with a price higher than the market price. Instead, the company chose to issue it after the stock price dropped from $220 to $130, and each future use of the ATM will bring about short-term structural selling pressure and continued suppression.

Serenity explained that the core logic behind maintaining a heavy position in AAOI is that the company's production capacity is limited, and demand visibility is very high, making AAOI more attractive compared to POET. Investors can continue to hold the stock for the long term without needing to support every business decision made by AAOI. "You can totally criticize the management's financing pace while continuing to hold its stock based on the supply-demand structure." AAOI's second-quarter revenue increased by 86% year-on-year, exceeding expectations, but the third-quarter guidance was weak. This ATM issuance further exacerbated the market's concerns about short-term valuation and liquidity.