Appen share price jumps 10% despite ASX 200 exit: What’s going on?

A woman wearing glasses has an uncertain look on her face as she bites her lip, she's just read some news on her phone.

A woman wearing glasses has an uncertain look on her face as she bites her lip, she's just read some news on her phone.

The Appen Ltd (ASX: APX) share price has been a very strong performer on Monday.

In afternoon trade, the artificial intelligence data services company’s shares are up 10% to $5.80.

This is despite the company’s shares being kicked out of the ASX 200 this morning.

What’s going on with the Appen share price?

The catalyst for the rise in the Appen share price today appears partly to have been a positive night of trade on Wall Street’s Nasdaq index.

The tech-focused index rose 1.4% on Friday night, whereas the Dow Jones was down 0.1%.

However, it is worth noting that the Appen share price is outperforming materially today, so this only explains a small part of the rise.

Another potential catalyst could be delayed buying. With its shares out of the ASX 200 index from this morning, it is possible that some investors have been holding off buying shares until the rebalance was complete.

This strategy makes sense when you consider that some fund managers and index funds will have been forced to sell shares over the last couple of weeks ahead of Appen’s exit from the benchmark index. This is to ensure that their portfolios meet strict investment mandates or that index funds reflect the changes.

With the selling pressure over, now would appear to be a good time to buy if you were planning to.

Anything else?

But wait, there’s more. Also potentially giving the Appen share price a lift today was a report in the AFR that vaguely claimed that an “investor who did not want to be named [..] had been approached by private equity firms running the numbers on the company.”

This may have sparked hopes that another takeover proposal is coming following the collapse of the Telus approach last month.

Time will tell if that is the case. But with the Appen share price down 48% since the start of the year, it isn’t unthinkable that someone could be considering a move.

The post Appen share price jumps 10% despite ASX 200 exit: What’s going on? appeared first on The Motley Fool Australia.

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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. has positions in and has recommended Appen Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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