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Why Applied Optoelectronics, Inc. Shares Fell 11.5% in June

What happened

Shares of Applied Optoelectronics (NASDAQ: AAOI) fell 11.5% in June, according to data from S&P Global Market Intelligence.

So what

On June 9, analyst firm Goldman Sachs issued a warning that high-growth tech stocks looked overheated and could use a big correction. Tech giants and upstarts plunged on that report, and Applied Optoelectronics' stock fell as far as 15.2% that day.

Image source: Getty Images.

Now what

Applied Optoelectronics set itself up for that quick plunge by posting strong gains in the previous 52 weeks. At the start of June, investors could look back at a thrilling one-year return of 586%, and it's not easy to hang on to market-crushing gains like these. Moreover, about half of the company's sales come from supplying fiber-optic components to Amazon.com and its sprawling network of data centers. Amazon shares plunged as much as 8.2% on June 9, dragging Applied Optoelectronics deeper into the red.

That being said, Applied Optoelectronics has earned its big gains the hard way. Quarterly sales nearly doubled year over year in the recently reported first quarter, and earnings jumped from near-breakeven to $1.10 per share. If anything, the June correction looks like a serious buying opportunity.

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Anders Bylund owns shares of AMZN. The Motley Fool owns shares of and recommends AMZN. The Motley Fool has a disclosure policy.