Appen Share Price Up on Big Earnings Upgrade (ASX: APX)

At time of writing, the share price of Appen Ltd [ASX:APX] is up 9.4%, trading at $25.50.

It’s interesting to note that the Appen share price was trading up in the lead up to today’s upgrade, with five winning sessions in a row.

This came after it almost broke 30 on the RSI indicator in the bottom third of the below chart, indicating it may have been ‘oversold’:

ASX APX Price Chart Analysis

Source: tradingview.com

We look at the latest announcement out of the company, which includes an earnings upgrade and an update on the Figure Eight acquisition.

Find out what makes Appen tick in this report on our top four ASX-listed AI and automation stocks. Each company detailed in the report is advancing technology in growth industries.

Appen share price gets a lift

With the announcement released prior to trading, the Appen share price got a lift from the earnings upgrade, spiking as high as $25.70 on open.

Here are the details of the earnings upgrade:

  • Full-year underlying EBITDA in the range of $96–99 million (previous guidance was for $85–90 million)
  • November and December performance translated at AU$1=US$.74
  • Current levels are estimated to add between $1 million and $1.5 million to EBITDA

The company noted that increases in monthly relevance revenues and margins from existing projects and customers was the primary driving force behind the upgrade.

It also noted that it believes strongly that the Figure Eight acquisition was the right idea, and confirmed its guidance of Anural Recurring Revenue (ARR) from the deal to be between $30 and $35 million.

Appen share price may have bottomed already

It is possible the Appen share price bottomed on 7 November.

So the potential buying opportunity we suggested earlier didn’t materialise.

On 7 November the RSI almost broke below 30, so it is possible some traders may have moved on Appen shares after this day.

Even when there was no news.

Overall, I think Appen remains a well-run company that could be immune to downturn if the US tech sector get hit in the coming months.

This is because I think that in such an event, major US tech companies will cut other parts of their budget, but not their AI budget.

AI will be the engine of greater efficiency for these companies — it’s even conceivable that they might plough more into AI research and thus Appen’s earnings.

Regards,

Lachlann Tierney,
For Money Morning

PS: Interested in AI’s potential? Find out about three other small-cap AI stocks in this report. Appen is also covered.


Lachlann Tierney is a writer for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently he has been working with Ryan Dinse. Ryan is involved in three publications:


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