It’s about time you buy this ASX tech share that’s beaten down 75% this year: expert

At a barbecue — or indeed on stock advice websites — investors hear all about the triumphant 10-baggers.

But we all know every portfolio has ASX shares that have broken the hearts of owners. It’s just no one talks about them.

It is perfectly understandable to be reluctant to trust a business again after it has burnt you or other investors badly. It’s just human nature.

However, investors need to remember that ASX shares have no memory. A stock doesn’t care that it was once $10 but now $2. 

The only thing that matters when considering equities to buy is what the future prospect of the business is at that point in time. History means nothing.

So if you take on this rational mindset, there is one technology stock that’s been an absolute dog the past couple of years that you may consider buying now:

‘We expect the share price to improve’

Appen Ltd (ASX: APX) used to be a darling of growth investors but has caused nothing but grey hairs since the COVID-19 pandemic hit.

The stock has lost an eye-watering 93% of its value since August 2020, and 75% year to date.

“The share price of this artificial intelligence data provider has fallen from $40.08 on August 17, 2020 to trade at $2.65 on November 24, 2022,” Red Leaf Securities chief John Athanasiou told The Bull.

However, Athanasiou feels like it’s time to now forgive Appen for past sins.

“We expect the share price to improve as money flows back to the domestic technology sector,” he said.

“The company expects fiscal year 2022 revenue to range between US$375 million and US$395 million.”

Discounted for a takeover?

The really exciting prospect for Athanasiou, though, is seeing other listed Australian tech companies like ELMO Software Ltd (ASX: ELO) and Nitro Software Ltd (ASX: NTO) receive tempting takeover bids from private investors.

“There’s been corporate activity in the domestic technology sector, as a weaker Australian dollar makes companies more attractive to international private equity firms,” he said.

“Appen, at this price, could be a target.”

Appen’s major clients are big US tech firms and after a torrid year, they themselves could be looking forward to better conditions next year.

And this could also provide a tailwind for Appen, reported The Motley Fool’s Bernd Struben last week.

The post It’s about time you buy this ASX tech share that’s beaten down 75% this year: expert appeared first on The Motley Fool Australia.

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More reading

• Down 75% in 2022, is it time for investors to give up the ghost on this ASX 300 tech share?
• Why is the Appen share price storming higher today?
• Could this imply light at the end of the tunnel for Appen shares?
• Appen share price sinks to another multi-year low despite new recruits
• 5 big ASX announcements making news this week

Motley Fool contributor Tony Yoo 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 and Elmo Software. 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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