Appen Ltd (ASX:APX) shares have rocketed 29% in just two days

The Appen Ltd (ASX:APX) share price has been on fire this week. Should you be buying?

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The Appen Ltd (ASX: APX) share price was a big mover again on Thursday with a 12% push higher to $14.44.

At one stage the shares of the leading global provider of data for the artificial intelligence market were up as much as 15.5% to an all-time high of $14.86.

At that stage Appen's shares had gained an incredible 29% in the space of just two trading days.

Why are Appen's shares on fire?

Surprisingly, there has been no news out of Appen this week to cause this buying frenzy.

Instead, investors appear to believe that the impressive results released by fellow tech stars Altium Limited (ASX: ALU) and WiseTech Global Ltd (ASX: WTC) are a sign that Appen will outperform expectations when its releases its half year results next week.

Appen is scheduled to make its release on Tuesday and all eyes will be on its guidance for the full year. Earlier this year the company stated that it expects to deliver full year underlying EBITDA at the upper end of its $50 million to $55 million guidance range.

However, this guidance was based on the AUD/USD exchange rate averaging 80 U.S. cents during the 12 months. Through some rough calculations, I estimate that the Australian dollar actually averaged 77 U.S. cents during the first half and is likely to average significantly less in the second half.

As a result, I wouldn't be surprised to see the company upgrade its full year guidance next week.

What about its half year results?

Just before going to press Appen responded to an ASX price query related to its share price gain this week. The statement revealed that management expects its half year results to be in line with expectations.

The release states: "While Appen has not provided guidance for the half year period, the Company does not believe the FY18 Half Year Results will be materially different from analyst expectations for the half year."

It will be interesting to see how the market responds to this statement tomorrow.

Should you invest?

While I believe that Appen is one of the best tech shares on the market and a great buy and hold investment option, I would suggest investors wait for its results release before investing. Especially given how the market appears to have already begun to price in significant outperformance this year.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium, Appen Ltd, and WiseTech Global. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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