$AAOI projects 10x growth with improving margins

In less than 2 years
However, management has a history of overpromising
1.
On the Q1 2024 call, CEO Thompson Lin said 800G alone could generate more than $500M to $600M next year.
They are still in the process of ramping up.
2.
In September 2023, AAOI filed a lawsuit against its largest customer, ATX Networks, which by 2022 had grown to contribute $105M, or 47% of company-wide revenue.
AAOI never disclosed this lawsuit to investors.
AAOI alleged that beginning in June 2023, ATX failed to make a series of required payments for fiber optic networking products supplied by AAOI that were several months past due.
ATX alleged the invoices contained multiple inaccuracies, including:
• an unexplained starting balance of $1.7M
• $1.2M in products that had not been shipped
• $9.1M in future tariff liabilities
The case ended in a mediated settlement.
3.
$AAOI gave guidance of $82M to $92M for Q3 2018.
They reported $56.4M.
There are other, harder-to-verify claims from the Culper Research short thesis that I won’t put much emphasis on, since short sellers are obviously incentivised to exaggerate and sometimes push claims that are difficult to prove. But these points are verifiable, and they’re worrisome.
I wouldn’t be surprised if there are delays to their very ambitious plans. Setting up facilities, hiring qualified labour, training them in a brand new operation, and getting production dialled in that fast, without any issues or delays, would be very exceptional.