Appen Ltd (ASX: APX) shares are having another disappointing session on Tuesday.
In afternoon trade, the artificial intelligence (AI) data services company's shares are down 6% to a new multi-year low of $1.31.
As you can see on the chart below, this latest decline means the company's shares are now down 60% over the last 12 months.
Unfortunately, as bad as that decline has been, it is nothing compared to its performance over the last three years.
For example, in the middle of August 2020, the Appen share price was fetching $38.96. Since hitting that level, its shares have lost a whopping 96.6% of their value.
To put that into context, a $10,000 investment at its peak a touch over three years ago, would now be worth just $336.24.
What's happened?
Investors have been hitting the sell button following a significant deterioration in its performance operationally and financially.
This was driven by heightening competition in the industry from more nimble players, as well as potential structural drivers.
The latter includes privacy changes brought into place by Apple which has led to social media platforms reducing their spending on digital advertising-related AI.
And while the company believed that the emergence of generative AI platforms (or large-language models) such as ChatGPT could be a big opportunity, this hasn't proven to be the case so far. And many appear to doubt that it ever will be for Appen.
WIll Appen shares keep going lower?
Unfortunately, the team at Macquarie doesn't believe the pain is over.
A recent note reveals that its analysts have an underperform rating and $1.02 price target on Appen's shares. This implies a potential downside of 22% from current levels.
Macquarie believes that Appen's first-half update demonstrates that structural and cyclical changes could be negatively impacting the company. It also highlights that increased competition from start-ups with far more cost-efficient operating models is undermining its growth in large-language models.
All in all, the Appen share price has all the hallmarks of a falling knife. It may not be wise to try and catch it despite its sizeable decline.
