Category: Stock Market

The Paladin Energy share price soared 30% in the first quarter. What’s next?
The Paladin Energy Ltd (ASX: PDN) share price had a strong first quarter of the financial year and managed to clip a 30% gain in the process.

Shares in the uranium explorer are currently resting at 79.2 cents apiece during morning trade on Thursday, having whipsawed in a wide price range across the length of 2022.

As seen in the chart below, the share has rallied hard off 52-week lows back on 23 June.

What’s next for the Paladin Energy share price?

Energy shares continue to catch a strong bid in the second half of 2022.

The S&P/ASX 200 Energy Index (ASX: XEJ) has returned around 37% this year to date, having bounced off a sharp low in September.

Paladin’s key market, uranium, has pushed higher over the past 12 months and gained 18% in that time.

While there’s been some volatility in pricing, the metal used in nuclear energy has shown a gradual climb upwards this year.

The price swings have been important for the growth in the Paladin share price, seeing as the company is a price taker on uranium.

As seen in the chart below, there’s been somewhat of a similarity in movements between the pair over the past 12 months to date.

This is important for projections for Paladin moving forward. For instance, four out of five analysts covering the share rate it a buy right now, according to Refinitiv Eikon data.

Meanwhile, forward contracts on uranium for physical delivery have priced uranium at US$49 per pound for February 2023, and US$50 per pound in March 2023.

At present, it trades at US$49.25 per pound. Furthermore, given Paladin’s lack of profitable earnings at present, valuation is increasingly difficult.

The company does, however, trade on a price-to-book (P/B) ratio of 3.98 times, roughly in-line with the GICS Metals & Mining Industry’s median of 4.09 times.

It is also estimated by analysts to deliver a 0.26% forward dividend yield, per Refinitiv.

Alas, it remains predominantly a uranium story for Paladin, seconded by the market’s breadth of investment into growth-type shares with no profits.

Meantime, the Paladin Energy share price has climbed 12% in the past 12 months.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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6 October 2022
If I’d invested $1,000 in Sayona Mining shares at the start of 2022, here’s what I’d have now
Shares in S&P/ASX 200 Index (ASX: XJO) lithium-focused newbie Sayona Mining Ltd (ASX: SYA) have rocketed in 2022. Though, the stock wasn’t hot out of the gates.

It traded flat for much of the first quarter of 2022 before charging to a decade-high in April – a peak that quickly turned into a trough.

But since then, the Sayona Mining share price has posted a partial recovery. It’s currently trading at 24.2 cents a share.

So, if one had funnelled $1,000 into the stock at the start of 2022, how would their investment have fared so far? Keep reading to find out.

Winner, winner

If I had invested $1,000 into Sayona Mining shares at the start of 2022, I’d imagine I would be pretty happy with my decision.

Those funds likely would have seen me acquiring approximately 6,896 shares for 14.5 cents apiece.

And for a moment, that would’ve been a nail-biting buy. At its 2022 low point, Sayona shares were swapping hands for just 11 cents, leaving my imagined holding with a value of around $760.

Fortunately, things have since turned around for the Sayona Mining share price.

At the current share price, my imaginary $1,000 investment would have grown to be worth around $1,660.

That’s one of the best year-to-date returns to be found on the ASX 200 right now. Indeed, the index has dumped 10% since the start of the year.

But does Sayona Mining’s strong recent performance put its shares squarely in the buy zone?

Why I’m still not sold on Sayona Mining shares

Sayona Mining is one of a handful of ASX 200 lithium shares not yet producing the battery-making material.

The company has a 75% stake in the North American Lithium (NAL) operation. A pre-feasibility study looking at the operation’s potential to restart production of lithium carbonate was launched this week. The restart is scheduled to kick off in the first quarter of 2023.

Upon the restart, an offtake agreement with Piedmont Lithium Inc (ASX: PLL) will come into effect. That will allow Piedmont to buy 113,000 metric tons of spodumene concentrate or 50% of the operation’s production annually, whichever is larger.

The company also revealed another pre-feasibility study was launched at the Moblan Lithium Project yesterday. Sayona Mining holds a 60% stake in the project.

It’s also exploring a number of lithium and gold prospective projects in Australia and Canada.

With all that in mind, Sayona Mining shares can be seen to promise much potential.

However, I would personally be more inclined to invest in profitable ASX 200 lithium shares.

Lithium is expected to boom in the near future and ASX 200 lithium favourites such as Pilbara Minerals Ltd (ASX: PLS) and Allkem Ltd (ASX: AKE) are already cashing in on the ‘white gold’.

I like that these companies face fewer development risks than upcoming producers. I would also argue they might have more potential to profit from an expected peak in lithium prices, tipped to occur in 2023.

The post If I’d invested $1,000 in Sayona Mining shares at the start of 2022, here’s what I’d have now appeared first on The Motley Fool Australia.

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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 no position in any of the stocks mentioned. 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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6 October 2022
Why is the Woodside share price having such a top run today?
The Woodside Energy Group Ltd (ASX: WDS) share price has been a solid performer on Thursday.

In morning trade, the energy producer’s shares are up 2.5% to $34.70.

This means the Woodside share price is now up over 50% since the start of the year.

Why is the Woodside share price pushing higher again today?

Investors have been scrambling to buy the company’s shares again on Thursday after OPEC+ announced a much-speculated production cut.

At a time when the global economy needs cheaper oil, the oil cartel decided to put profits first and cut production by 2 million barrels per day from November.

Unsurprisingly, this led to oil prices extending their positive run during overnight trade.

According to Bloomberg, the WTI crude oil price was up 1.5% to US$87.82 a barrel and the Brent crude oil price was up 1.8% to US$93.50 a barrel.

This has lifted the Woodside share price, as well as the shares of peers Santos Ltd (ASX: STO) and Origin Energy Ltd (ASX: ORG).

The response

US President Joe Biden has been calling for cuts and so was disappointed with OPEC’s decision. A White House statement said:

The President is disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of Putin’s invasion of Ukraine. At a time when maintaining a global supply of energy is of paramount importance, this decision will have the most negative impact on lower- and middle-income countries that are already reeling from elevated energy prices.

The White House also advised that he will now look at reducing OPEC’s control over energy prices.

The President is also calling on U.S. energy companies to keep bringing pump prices down by closing the historically large gap between wholesale and retail gas prices — so that American consumers are paying less at the pump. In light of today’s action, the Biden Administration will also consult with Congress on additional tools and authorities to reduce OPEC’s control over energy prices.

Judging by the performance of the Woodside share price today, investors don’t appear to believe that OPEC’s influence will diminish any time soon.

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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 no position in any of the stocks mentioned. 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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6 October 2022
Has the Bank of Queensland share price got 25% upside baked in?
The Bank of Queensland Limited (ASX: BOQ) share price has struggled year to date, but one analyst is tipping its fortunes to turn around.

Bank of Queensland shares have lost nearly 14% so far this year. For perspective, the S&P/ASX 200 (ASX: XJO) has fallen 8.45% in the year to date.

Let’s check the outlook for the Bank of Queensland share price.

Significant upside

Analysts at Citi are optimistic about the Bank of Queensland share price. Citi has put a buy rating and a $8.75 price target on the regional bank’s shares. This is a 26% upside on the current share price of $6.93.

Analysts are predicting cost synergies from the Members of Equity Bank (ME Bank) acquisition to be supportive of earnings growth. However, Citi also noted mortgage loan growth could slow amid interest rate rises.

The Reserve Bank of Australia (RBA) lifted rates by 0.25% on Tuesday. However, the market had been expecting a rate rise of 0.5%.

In more good news for shareholders, Citi is predicting Bank of Queensland will dish out a fully franked dividend per share of 46 cents in FY22.

Meanwhile, in FY23, Citi is predicting Bank of Queensland will deliver a fully franked dividend of 50 cents per share.

Bank of Queensland delivered an interim dividend of 22 cents per share earlier this year.

The company is due to release its full-year financial results for the 2022 financial year on 12 October.

Share price snapshot

Bank of Queensland shares have shed nearly 27% in the past 12 months, but have climbed 4.52% in the past week.

For perspective, the ASX 200 has lost nearly 6% in the past year.

Bank of Queensland has a market capitalisation of about $4.48 billion based on the current share price.

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Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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6 October 2022
Why is the PointsBet share price smashing the ASX All Ords on Thursday?
The PointsBet Holdings Ltd (ASX: PBH) share price is having a solid day despite the market weakness.

In morning trade, the sports betting company’s shares are up 3% to $2.10.

This compares favourably to a 0.3% decline by the All Ordinaries index.

Why is the PointsBet share price outperforming?

The catalyst for the rise in the PointsBet share price on Thursday has been the release of an announcement.

According to the release, the company’s Premier Turf Club business has entered into an agreement with 1/ST Technology to deliver a fully integrated, white-label advance-deposit wagering (ADW) horse racing betting experience to PointsBet customers across the United States.

1/ST Technology is a business division of The Stronach Group (TSG), which is North America’s dominant thoroughbred horse racing company.

Under the partnership, 1/ST Technology will provide market leading horse racing betting products and content solutions that will be fully integrated within the PointsBet sportsbook app. The partnership will also deliver a PointsBet branded stand-alone ADW offering in eligible states outside those in which the company currently offers sports betting.

The release notes that the company will own and operate the ADW business, with the ownership of customer data remaining with PointsBet.

Management expects the PointsBet branded ADW solution to launch in early 2023, delivering PointsBet an online betting presence in over 30 US states. This includes in jurisdictions in which it does not currently offer sports betting.

‘A pivotal moment’

PointsBet’s CEO, Sam Swanell, was very pleased with the news and sees it as a pivotal moment for the company’s US expansion. He said:

Today marks a pivotal moment in the evolution of our US expansion strategy. Horse racing has a unique role to play alongside sports betting in the United States, and despite already generating over US$6.5 billion per annum in industry online handle, we consider it an attractive category on the cusp of further expansion on the back of the ongoing shift from brick and mortar to digital.

With PointsBet’s mature market Australian racing expertise, and now a strategic partner in 1/ST TECHNOLOGY that provides us with a market leading portfolio of racing products and services, we can introduce new and existing customers to a dynamic and interactive PointsBet branded horse betting experience. This will be supported through cost effective offers and marketing, along with the utilisation of our extensive US sports betting database.

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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 Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. 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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6 October 2022
Lake Resources share price leaps 9% on new lithium deal
The Lake Resources NL (ASX: LKE) share price is surging higher, up 8.96% in early trade.

The ASX lithium stock closed yesterday trading at $1.00 per share and is currently fetching $1.095.

This comes in the wake of a new lithium deal announced this morning.

What new lithium deal was reported?

The Lake Resources share price is running hot after the miner announced a strategic investment and offtake agreement with WMC Energy at its Kachi Project, located in Argentina.

The Conditional Framework Agreement (CFA) will see WMC Energy take a 10% strategic investment in Lake Resources for $1.20 per share. Thatâs 20% above the Lake Resources share price on opening this morning.

The offtake agreement is for 50% of the Kachi Projectâs lithium product, up to 25,000 metric tons per annum (mtpa) of battery grade lithium (LCE). The offtake will be priced based on an agreed market price formula. It lasts for an initial 10-year term, with an option to extend for another five years.

Commenting on the collaboration, Lake Resources executive chairman Stu Crow said:

The CFA delivers a long-term strategic alignment with WMC and its supply chain into its European and North American customers. WMC Energy has a track record of being a market leader in nuclear fuels and expanded into battery materials including lithium to serve predominantly the US and European lithium-ion battery supply chain for EVs with their strategic needs.

Lake Resources CEO David Dickson added, âIncreasing customer and consumer scrutiny around the environmental and ethical credentials of lithium projects particularly from the European markets drives our focus on sustainable extraction.â

Also likely spurring the Lake Resources share price higher today is the prospect that the Kachi Project will be fully developed faster.

Amrish Ritoe, director of corporate business development for WMCâs battery materials team, said, âWith our extensive network in Europe and North America, we are well positioned to create a partnership with Lake and others that will help Lake to accelerate the development of the Kachi Project.â

The agreement remains subject to Lake Resources achieving a standard set of conditions.

Lake Resources share price snapshot

With todayâs intraday gains factored in, the Lake Resources share price is up an impressive 91% over the past 12 months. That compares to a 7% loss posted by the All Ordinaries IndexÂ (ASX: XAO) over the full year.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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6 October 2022
Down 20% since mid-August, Lynas share price ‘remains unattractive’: expert
The Lynas Rare Earths Ltd (ASX: LYC) share price has struggled since mid-August, but what do analysts predict for the company?

Lynas shares have descended more than 20% since market close on 17 August and are currently trading at $8.05 apiece. For perspective, the S&P/ASX 200 (ASX: XJO) has fallen 4% over the same time frame.

Let’s check the outlook for the Lynas share price.

What’s ahead?

Lynas is exploring rare earths Neodymium and Praseodymium (NdPr) at the Mt Weld Project in Western Australia. The company also operates a rare earths processing plant in Malaysia.

Ord Minnett senior investment advisor Tony Paterno is recommending investors sell Lynas Rare Earths shares.

Paterno highlighted Lynas’ recent water supply issues at its Malaysian processing plant. Lynas reported to the market on 13 September the disruption is “affecting production”.

Commenting on his outlook for the Lynas share price on The Bull, Paterno said:

We have lowered fiscal year 2023 production forecasts by 8 per cent. We have reduced our EBITDA forecasts by 13 per cent. In our view, the current risk/reward remains unattractive.

In June, Lynas received a $120 million US government contract for the establishment of heavy rare earths separation facility in Texas. It’s targeting production to begin in financial year 2025. As well, Lynas is also constructing a processing facility in Kalgoorlie.

However, another broker is more optimistic on Lynas shares. The team at Macquarie recently lifted the Lynas outlook to outperform with a $9.40 price target. That’s a nearly 17% upside on the current share price at the time of writing.

Share price snapshot

Despite a tough run year to date, the Lynas share price has risen 27% in the past 52 weeks.

For perspective, the ASX 200 has fallen nearly 6% in the past year.

Lynas has a market capitalisation of about $7.2 billion based on the current share price.

The post Down 20% since mid-August, Lynas share price ‘remains unattractive’: expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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6 October 2022
Why a 2-day stock market rally hasn’t killed the bear yet
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Investors have finally seen the stock market behave better over the past couple of days. After having to deal with a horrible September that sent the Dow Jones Industrial Average (DJINDICES: ^DJI) into bear-market territory along with the S&P 500 (SNPINDEX: ^GSPC) and Nasdaq Composite (NASDAQINDEX: ^IXIC), the first two trading sessions of October have been remarkable.

Yet as Wednesday morning dawned, investors appeared likely to have to prepare for a pause in the fourth-quarter celebration. With contracts on stock index futures down around 1%, it’s clear that long-term investors will have to have patience in order to benefit from the recovery when it comes. Moreover, the next several weeks will likely bring a lot more uncertainty into the mix, making it more important than ever to have conviction in your views of the companies in which you’ve invested.

Hope springs eternal

Investors have had to deal with a lot over the past several years. The economic disruptions from a global pandemic forced central banks and national governments to take unprecedented actions. Changes in behavior made businesses pivot sharply, both to keep themselves in operation and to respond to the changing needs of their customers. Even as the influence of the pandemic waned and people strived to return to their former lives, the pace of recovery in various places was out of alignment with others, causing more disruptions that kept businesses from reaching optimal efficiency and capacity.

Central banks always intended the emergency measures they took to be temporary, but market participants had learned to look at such comments with a cynical eye. Even after the financial crisis of 2008 and 2009 gave way to a decade-long expansion, for instance, Federal Reserve officials were reluctant to reverse the flow of liquidity they had added to the financial system in the wake of the Great Recession.

In that context, the current Fed’s insistence on raising interest rates sharply to prevent inflationary pressures from becoming entrenched in the U.S. economy stood out as a different sort of response from the central bank. In large part, the current bear market stems from investors’ disbelief that the Fed would hold the line even in the face of heavy criticism not just from financial markets but also from politicians and the public at large.

Will the Fed flinch?

Movements in the broader financial markets reflected the new belief that the Fed will indeed have to reverse the sharp course of its monetary tightening moves. The abrupt reversal of government policy in the U.K. showed that foreign countries were still paying close attention to what market participants had to say about their actions. The most obvious sign that investors hoped the same would happen in the U.S. came from the big decline in bond yields, which in some ways was even more remarkable than the two-day stock market rally investors have seen.

Yet it’s far from clear that the Fed will reverse course. Having staked its credibility on fighting inflation until the bitter end, even a conciliatory slowdown in its future course of interest rate increases could damage its reputation.

Meanwhile, markets will get huge amounts of information in the coming weeks about what’s happening in the economy. Hundreds of companies will release their third-quarter financial reports, with many of them probably emphasizing the impacts of inflation, a strong U.S. dollar, higher interest rates, and ongoing business disruptions as factors that have held back short-term growth. Yet what investors will likely focus on is whether those companies see better times ahead.

Similarly, economic data will shed light on how entrenched inflation has already become. If falling gasoline prices send costs of other goods and services down along with them, then the Fed might not need to be as aggressive.

Investors need to prepare for continued volatility. Even if the market is beginning a longer-term recovery, it won’t be obvious immediately — and you shouldn’t expect to see the market keep soaring day after day.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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6 October 2022
The Rio Tinto share price held up surprisingly well in September. Here’s why
The Rio Tinto Limited (ASX: RIO) share price has seen plenty of volatility over 2022. But, interestingly, the miner significantly outperformed S&P/ASX 200 Index (ASX: XJO) during September.

Last month, the ASX 200 dropped by 7.3%. This compares to Rio Tinto shares which only fell by 1.1%.

Now, it’s worth pointing out that the Rio Tinto share price did start falling on 26 August 2022, and it fell by 5.3% between 26 August and the end of September. Clearly, not every share and index is going to go up and down at the same time. Though, the ASX 200 did drop by 8.9% between 26 August and 30 September.

Let’s have a look at what may have impacted the miner during the month.

September announcements

Rio Tinto made quite a few announcements during the month that may have led investors to want to buy its shares.

One of the first things was that Rio Tinto and Turquoise Hill finally reached an agreement in principle for the ASX miner to acquire full ownership of the Canadian-listed miner for C$43 per share.

This agreement has the unanimous approval of the independent special committee of Turquoise Hill’s board of directors.

The transaction will require the approval of 66.7% of votes cast by shareholders, including Rio Tinto’s and the approval of a simple majority of the votes cast by minority shareholders of Turquoise Hill.

This acquisition will enable Rio Tinto to move forward with the large Oyu Tolgoi copper mine in direct partnership with the Government of Mongolia.

This will also increase Rio Tinto’s exposure to copper, which is seen as having a promising future due to the decarbonisation trend.

Another factor that investors could have taken into account for the Rio Tinto share price was that the ASX mining share and China Baowu Steel Group have agreed to enter into a joint venture for the Western Range iron ore project in the Pilbara, Western Australia.

Construction will begin in early 2023, with first production expected in 2025. Western Range’s annual production capacity of 25mt of iron ore will help sustain production at its existing Paraburdoo mining hub.

Another Rio Tinto announcement was the start of underground mining at its Kennecott copper operations. It approved a $55 million investment in development capital to start underground mining and expand production at Kennecott.

The particular area of underground mining that Rio Tinto will focus on will deliver a total of around 30kt of additional mined copper through the period to 2027, alongside open-cut operations. The first ore is expected to be produced in early 2023, with full production in the second half of the year.

Rio Tinto share price snapshot

Over the past six months, Rio Tinto shares have fallen by around 18%.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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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6 October 2022
Appen share price crashes 18% on ‘ongoing uncertainty’ update
The Appen Ltd (ASX: APX) share price is having a very difficult day on Thursday.

In morning trade, the artificial intelligence (AI) data services company’s shares are down 18% to a multi-year low of $2.73.

Why is the Appen share price crashing?

Investors have been selling down the Appen share price this morning following the release of the company’s trading update for FY 2022.

According to the release, there has been no improvement in trading conditions since the end of a difficult first half. As a result, the company is not expecting to deliver on its full year guidance.

In August, Appen advised that it expected its FY 2022 revenue skew to be weighted to the latter part of the second half, with revenue down year over year due to a slowdown of Global customers.

It also stated that its FY 2022 EBITDA and EBITDA margin was expected to be materially lower than FY 2021. This is mainly due to lower revenue, as well as its investment in product, technology, and transformation.

So how bad is it?

This morning Appen warned that there are significant challenges in providing guidance at this time. This is due to “ongoing uncertainty” in relation to global customer spend and the impact of economic conditions on new business.

Nevertheless, it has provided investors with an idea of what it is now expecting for the full year.

Appen is now expecting:
- FY 2022 revenue in the range of US$375 million to US$395 million (down 11.7% to 16.2%)
- Constant currency EBITDA of US$13 million to US$18 million (down 77.2% to 83.5%)
In respect to its earnings, management advised that this decline is largely due to lower gross profit from lower revenue, and an unfavourable change in its revenue mix. This revenue mix change reflects a reduction in some large higher margin projects and an increase in smaller lower margin projects.

Will things get better soon?

Worryingly for Appen, business is actually booming despite what you might think from the above guidance.

But despite its Global division continuing to win new projects and its project count sitting at an all-time high, the size and stage of these projects is insufficient to offset the reduction in revenue from higher margin core programs.

In addition, management revealed that its non-global business continues to grow. In fact, momentum in the Enterprise business is building with year to date bookings up 22% since this time last year. However, non-global revenues are typically at lower margins compared to its core programs.

In response to these challenges, Appen advised that it is focused on high impact initiatives. These include accelerating productivity improvements, increasing the use of offshore facilities for project delivery, engineering, and business support, and right sizing investments to market opportunities.

Appen’s CEO, Mark Brayan, commented:

Despite the challenging operating conditions, we remain committed to our long-term strategy including investments in New Markets to diversify revenue and products to improve productivity. While our plans to increase the use of offshore facilities are gathering pace as well as our actions to reduce costs, the full benefits of these programs will not be evident in FY2022.

Appen has a strong balance sheet with no debt. Additionally, the business has solid cash conversion, and we remain confident in our ability to invest and implement our strategy during this transitional period.

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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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6 October 2022