It was a year to forget for the Appen Ltd (ASX: APX) share price in 2021.
The artificial intelligence (AI) data services company’s shares were among the worst performers on the ASX 200 during the 12 months.
Over the period, the Appen share price lost a massive 55% of its value. This means its shares are now trading approximately 73% below the record high they reached in 2020.
Why did the Appen share price crash in 2021?
Investors were selling down Appen’s shares in 2021 amid concerns over its performance and outlook.
In respect to the former, Appen’s half year results in August revealed a 2% decline in revenue to US$196.6 million and a 55.1% reduction in net profit after tax to US$6.7 million.
Given the lofty multiples that the company’s shares traded on, this didn’t go down well with investors. They were were quick to hit the sell button despite management promising a stronger second half.
What about the future?
Also weighing heavily on the Appen share price was a broker note out of Macquarie Group Ltd (ASX: MQG). This note sparked concerns over the company’s outlook.
In November, the broker downgraded Appen’s shares to an underperform rating and cut the price target on them to $9.50. This implies potential downside of 14% for its shares from current levels.
Macquarie revealed that it has been speaking to industry participants and notes that there is an emerging trend which has seen some big tech companies look to bypass Appen and directly crowdsource for data annotation services.
It believes this is being driven by tighter privacy and data retention standards, which has resulted in companies revising their strategies and developing their own crowd-sourcing solutions. Macquarie fears this could reduce demand for Appen’s services and downgraded its sales and earnings estimates to reflect this.
All eyes will be on the company’s full year results in February. A big improvement in its performance and proof that its outlook is not bleak could bring the Appen share price back to life.
The post Why the Appen (ASX:APX) share price crashed 55% lower in 2021 appeared first on The Motley Fool Australia.
Should you invest $1,000 in Appen right now?
Before you consider Appen, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Appen wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
More reading
- 5 things to watch on the ASX 200 on Wednesday
- These were the 5 worst performing ASX 200 shares in 2021
- In the ‘dog basket’: 6 ASX shares that could rebound in 2022
- Leading brokers name 3 ASX shares to buy
- These are the 10 most shorted ASX shares
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Appen Ltd. The Motley Fool Australia owns and has recommended Appen Ltd. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
from The Motley Fool Australia https://ift.tt/3pUk2iL
Leave a Reply