Down 60% in a year, are Appen shares a bargain buy?

The Appen Ltd (ASX: APX) share price has taken a beating over the last 12 months, tumbling nearly 60% in that time.

Right now, stock in the tech outfit is trading for $2.635 apiece. This time last year, it was swapping hands for $6.55 per share.

For comparison, the All Ordinaries Index (ASX: XAO) has dumped 3% in that time while the S&P/ASX All Technology Index (ASX: XTX) has dropped 7%.

So, could now be the time to jump on board Appen shares and make the most of a potential recovery? Let’s take a look.

What went wrong for the Appen share price?

The last 12 months have been a rollercoaster for those invested in the data and services provider’s stock. Appen provides speech and language data to companies involved with artificial intelligence and machine learning.

The former market darling listed in 2015 after offering shares for 50 cents apiece in its initial public offering (IPO). It later rocketed to a record high of $42.53 in 2020.

However, its time in the sun was brief. The stock had hit a low of $2.22 by late 2022.

In the meantime, it was presented with a $9.50 per share, $1.2 billion takeover bid. Though, that was withdrawn within 24 hours of its announcement.

Between the offer being tabled and retracted, Appen revealed its earnings before interest, tax, depreciation, and amortisation (EBITDA) for the first half of financial year 2022 would likely be lower than the prior period.

And its earnings continued to fall in the second half. Its full year underlying EBITDA, revealed in February, came to just US$11 million – an 86% year-on-year tumble.

Simultaneously, soaring inflation and resulting rate hikes saw the market bidding down many ASX tech shares.

But with AI taking the public by storm in 2023 – take the rise of ChatGPT for example – could the future be brighter for the Appen share price?

Is now the time to snap up the ASX tech stock?

Datt Capital chief investment officer Emanuel Datt appears hopeful. The expert said, courtesy of reporting by my Fool colleague Tony:

Appen… has experienced significant downward pressure on the share price at the same time as AI has catapulted into mainstream consciousness via the launch of OpenAI’s ChatGPT … We view this environment becoming more crowded and highly competitive.

Meanwhile, recent insider buying suggests those in the know are bullish on the stock.

Still, broker Bell Potter remains unconvinced. It tipped the Appen share price to fall 15% to $2.25.

It downgraded the stock following the release of the company’s full year earnings, in which it dropped its financial year 2026 targets pending a full strategy review to be announced next month.

Appen also noted it’s seen “a soft start” to the new year and expects its first half EBITDA to be “materially lower” than that of the prior period.

The post Down 60% in a year, are Appen shares a bargain buy? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 3 ‘compelling’ ASX tech shares cheap enough to buy now
• Why Appen, Harvey Norman, Healthco, and Lake shares are dropping today
• Why Appen, Regis Resources, Syrah, and Zip shares are charging higher today
• This beaten-up ASX 300 tech share is down 60% in a year, and directors are buying it up
• Guess which beaten-up ASX 300 tech share is up 16% this month

Motley Fool contributor Brooke Cooper 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. 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.

from The Motley Fool Australia https://ift.tt/yvLgNm6