Here's why the Appen (ASX:APX) share price is rocketing 16% higher

The Appen Ltd (ASX:APX) share price is rocketing higher on Wednesday despite the market selloff. Here's why its shares are on fire…

| More on:
Young girl wearing a suit and tie with rocket wings looks to the sky representing the highest traded stocks today

Image source: Getty Images

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 market may be a sea of red on Wednesday but that hasn't stopped the Appen Ltd (ASX: APX) share price from rocketing higher.

In afternoon trade, the artificial intelligence (AI) data services company's shares are up a sizeable 16% to $13.07.

However, despite this strong gain, the Appen share price is still down a massive 70% from its 52-week high.

Why is the Appen share price rocketing higher today?

The catalyst for the rise in the Appen share price today was the release of a business and trading update this morning.

In respect to the former, Appen is restructuring its business to align to its product-led growth strategy and distinct customer propositions.

This will see the company operate with four customer-facing business units – Global, Enterprise, China, and Government.

Management believes the changes will provide greater visibility of the drivers and performance of the business. Furthermore, it notes that the changes reflect Appen's evolution from being the leading provider of AI data annotation services to a provider of a broad range of AI data annotation products and solutions that unlock growth in new markets.

What else?

While the above is a positive move, the main driver of the Appen share price performance today is likely to have been its trading update.

Analysts were very disappointed recently when the company neglected to provide an update on its performance while presenting at the Macquarie Group Ltd (ASX: MQG) conference. Particularly given comments about changing behaviour from its customers and fears over increasing competition.

Positively, this morning the company provided the market with what it wanted and, as you might have guessed from the Appen share price, the news was positive.

According to the release, Appen is on track to achieve underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of US$83 million to US$90 million in FY 2021.

This is in line with its previous guidance of A$120 million to A$130 million (based on constant currency of 1 AUD = US$0.6904) and adjusted into US dollars to reflect a change in its reporting currency. It also represents growth of 18% to 28% year on year.

Shareholders will no doubt be hoping it is onwards and upwards for the Appen share price now things are becoming a little less uncertain.

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Appen Ltd. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

Green stock market graph.
Share Gainers

Here are the top 10 ASX 200 shares today

It was one for the history books today.

Read more »

A young woman holding her phone smiles broadly and looks excited, after receiving good news.
Share Gainers

Why Boss Energy, DroneShield, Pilbara Minerals, and Polynovo shares are charging higher today

These shares are having a good time on hump day. But why?

Read more »

Ten smiling business people wave to the camera after receiving some winning company news.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a nervous, but positive, Tuesday for ASX investors.

Read more »

two colleagues high five each other as they sit side by side at a long desk in front of their laptop computers in an office environment.
Share Gainers

Why Bapcor, Ramelius, Sandfire, and WIA Gold shares are rising today

These shares are having a better day than most on Tuesday. But why?

Read more »

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors started the week off in a good mood today.

Read more »

Excited couple celebrating success while looking at smartphone.
Share Gainers

Why Bellevue Gold, Bubs, Clarity Pharmaceuticals, and Regal Partners shares are rising today

These shares are starting the week on a positive note.

Read more »

Two people lazing in deck chairs on a beautiful sandy beach throw their hands up in the air.
Travel Shares

Guess which ASX All Ords travel stock just rocketed 17% on an earnings upgrade

Investors are piling into the ASX All Ords travel stock today. Here's what's happening.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords stock just rocketed 34% on strong earnings growth

Investors just sent this ASX All Ords stock surging 34%. Here’s what’s happening.

Read more »