The Appen share price is down 9% today. Here's why

The Appen Ltd (ASX: APX) share price is in freefall today, down 9%. Are Appen shares a post-earnings buy today as a result?

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Appen Ltd (ASX: APX) share price is having one of those not so good, very bad kinds of days. Appen shares are down 9% at the time of writing to $35.17 each. That's a fairly steep decline for a single day's trading, especially after the company's share price dropped more than 11% just yesterday following Appen's release of its full-year earnings for the 2020 financial year.

So what's going on with the Appen share price?

What is Appen?

Appen is known as one of the ASX's highest-flying tech shares, so much so that is is one of the A's in the WAAAX shares – the ASX's answer to the US FAANG stocks. Appen specialises in making human-annotated datasets. Basically, that means Appen makes data that helps computers understand human interaction in better ways. Its applications range from smart assistant's like Siri and Alexa to speech-to-text dictation and translation services.

Why the Appen share price is plunging today

As I mentioned earlier, yesterday Appen reported its earnings to investors, and it didn't go down too well. Despite the company posting 25% revenue growth, a 20% increase in profits and a 12.5% increase to its dividend, investors evidently expected better things. Appen shares opened more than 15% lower yesterday and had only recovered by 4.5% by the end of the trading day.

It seems investors have woken up this morning and decided that wasn't enough. Perhaps today's moves are traders taking a bit of profit off the table after buying in at market open yesterday. Perhaps it was decided that Appen's numbers don't justify the company's price-to-earnings (P/E) ratio of 102. Or perhaps investors didn't like that Appen only reaffirmed its guidance for FY21 rather than bumping its expectations up.

It's hard to say exactly what is causing today's second round of selling. But these things tend to happen from time to time with these lofty growth shares. There are (and have been for a while) a lot of expectations baked into Appen's share price. When there is even a hint of a hiccup, these kinds of sell-offs are not uncommon for market darling growth shares.

Some perspective might be handy as well. Even after this week's selling, Appen is still trading at levels we only saw a month or 2 ago right now. And back then, Appen was at record highs.

Is Appen a buy after this sell-off?

If you've been kicking yourself for missing out on Appen shares and are super-bullish on this company, then perhaps today's plunge is a good time to buy. But personally, I still think Appen's shares are priced to perfection, even after today's sell-off. I'm not interested in paying a 3-digit earnings multiple for Appen, despite its pleasing growth rates. But if you are, then all luck to you!

Should you invest $1,000 in Aussie Broadband Limited right now?

Before you buy Aussie Broadband Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Aussie Broadband Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Appen Ltd. 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.

More on Share Fallers

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Healius, Light & Wonder, REA Group, and Regis Resources shares are falling today

These shares are ending the week in the red. Let's find out why.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why ANZ, Brainchip, Light & Wonder, and Pilbara Minerals shares are falling today

These shares are tumbling on Thursday. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Aurizon, JB Hi-FI, Nuix, and Platinum shares are tumbling today

These shares are falling on hump day. But why?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why HMC Capital, Platinum, Sigma, and Skycity shares are dropping today

These shares are having a tough session on Tuesday. But why?

Read more »

Oil worker using a smartphone in front of an oil rig.
Energy Shares

ASX 200 energy shares plunge on shock OPEC move

ASX 200 energy shares like Woodside and Santos are tumbling on Monday. Let’s find out why.

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why Brainchip, Helia Group, Reliance Worldwide, and Westpac shares are dropping today

These shares are starting the week in the red. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why Block, Corporate Travel Management, Judo, and Zip shares are sinking today

These shares are missing out on the good times on Friday. But why?

Read more »

Man with a hand on his head looks at a red stock market chart showing a falling share price.
Share Fallers

These were the worst-performing ASX 200 shares in April

These shares were out of form last month. But why?

Read more »