Can Appen (ASX:APX) shares rise to glory again?

The artificial intelligence services provider was once the darling of investors, but the stock price has tumbled more than 70% over the past year

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Poor Appen Ltd (ASX: APX) shareholders.

The stock has been a nightmare over the past 12 months, as the price plunged more than 70%. 

Appen shares exceeded the $40 mark in August 2020, but lagged at $10.85 on Tuesday afternoon.

That's after the artificial intelligence data provider returned a staggering 2,200% in the 5 years prior. 

Those that are still hanging on will be wondering "Where to from here?"

And those investors on the sidelines might be thinking the technology stock could now be a bargain buy.

Some experts recently offered their opinion on whether now is the time to grab Appen shares:

Appen has a lot of catching up to do

Burman Invest chief investment officer Julia Lee said that it's important for investors to focus on Appen's long-term prospects.

She pointed out that the last financial update saw Appen pare back the earnings forecast for the current year to $81 to $88 million.

But even after that downgrade, the business has a lot of work to do for the rest of the year to "catch up" to expectations.

"It means they really need to shoot the lights out in the first half, because in the first half of this year they only saw earnings of $27.7 million," Lee told Switzer TV Investing.

"So extremely high expectations for the second half."

This situation made Appen shares "extremely high risk", according to Lee.

Many eggs in one basket

Appen's clientele, which includes the large US technology giants, is also potentially problematic.

After COVID-19-induced spending reviews, there is a risk that some of those clients might bring AI data work in-house, rather than outsource to Appen.

"And the thing with Appen is that the top 5 clients make up more than 90% of revenue," said Lee.

"So if it loses one of them or sees a decrease in revenue from one of those clients, it does have a big impact." 

Appen shares are trading at a discount

On the flip side, Catapult Wealth portfolio manager Tim Haselum is rating Appen shares as a "buy".

"It has strong rebound potential," he said on The Bull.

"We like the company and believe it's undervalued."

Haselum recognised the company's acquisition of mobile location data provider Quadrant Global and has faith that demand for AI services will remain "strong".

"This language technology and data services company has reduced guidance," he said.

"But the stock is trading at a discount on these valuations, in our view."

Motley Fool contributor Tony Yoo owns shares of Appen Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Appen Ltd. The Motley Fool Australia owns shares of and has recommended Appen Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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