The carnage continues: Appen (ASX:APX) shares tumble 7%, here’s why

In what would be a disappointing end to the week for ASX investors, the S&P/ASX 200 Index (ASX: XJO) has taken a nasty tumble this Friday thus far. At the time of writing, the ASX 200 is down by a notable 1.1%. But that’s nothing compared to the Appen Ltd (ASX: APX) share price. Appen shares are currently down a nasty 6.67% at $8.39 each.

That puts Appen’s 2022 performance to date at a miserable -24.9%. It also means that Appen shares are now down close to 80% from the all-time highs we saw back in August 2020.

So what’s gone so wrong with the Appen share price today?

Well, we can’t quite be certain. There’s been no major news or announcements out of Appen today, indeed for the past week or so.

But it’s possible that Appen shares have been caught up in the ASX tech share selloff we seem to be witnessing so far this Friday. Although the ASX 200 is down by more than 1% so far, the S&P/ASX All Technology Index (ASX: XTX) is faring far worse. It’s currently down by more than 2.7%.

Down 7%! What’s Appen-ing to Appen shares?

This, naturally, has seen ASX tech shares shed value across the board. For example, Block Inc CDI (ASX: SQ2) shares are down close to 6%. Xero Limited (ASX: XRO) shares have lost close to 4%. And the WiseTech Global Ltd (ASX: WTC) share price is down almost 3%. Poor Nuix Ltd (ASX: NXL) has lost more than 6% today. So it’s not just Appen.

This tech share selloff appears to have been sparked by a savage selloff over in the United States overnight. The tech-heavy US NASDAQ-100 (INDEXNASDAQ: NDX) Index lost 2.33% overnight, resulting in most US tech shares shedding chunks of value.

This in turn could have been induced by the inflation figures that came out last night from the US economy. The US Department of Labor announced last night that inflation Stateside was running at an annualised 7.5%. That’s the highest level in decades.

Investors know that higher inflation typically leads to higher interest rates. And tech shares like Appen are particularly vulnerable to higher rates. This is due to the fact that many of them are still in their ‘growth phases’ of development, and have a higher reliance on debt.

So that might be why the Appen share price, along with many other ASX tech shares, is getting punished today. That might disappoint some Appen investors, but that’s the way the cookie crumbles sometimes.

At the current Appen share price, this ASX tech share has a market capitalisation of $1.03 billion, with a trailing dividend yield of 1.2%.

The post The carnage continues: Appen (ASX:APX) shares tumble 7%, here’s why appeared first on The Motley Fool Australia.

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• Is the ASX value shares party just getting started?
• Why Appen, Nanosonics, Nearmap, and Temple & Webster are sinking

Motley Fool contributor Sebastian Bowen 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, Block, Inc., WiseTech Global, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nuix Pty Ltd. The Motley Fool Australia owns and has recommended Appen Ltd, WiseTech Global, and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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