Shares in artificial intelligence (AI) company Appen Ltd (ASX: APX) finished nearly 5% lower yesterday despite no announcements from the company.
The sentiment around the company certainly seems to have improved in recent months. Shares are up 23% since last month, but still down a huge 63% since their lofty highs last year.
APX share price
Tax-loss selling?
Some investors might’ve sold out of Appen yesterday to crystalise some losses to offset against other capital gains. Given many holders likely bought into this recent downgrade cycle, many were likely holding Appen’s shares at a loss.
Yesterday was the last day of the financial year, which could explain why there was significant selling volume.
Appen’s shares weren’t the only victim of some potential tax-loss selling yesterday. Other poor performers including Nuix Ltd (ASX: NXL) and AGL Energy Limited (ASX: AGL) also took a tumble yesterday, down 12.9% and 9.9% respectively.
Yesterday was likely a double whammy for these two. Nuix was recently accused of insider trading and AGL announced its demerger, which will split the company into two separate listed businesses.
What’s Appen been up to recently?
It’s been a while since the company last updated the market with trading updates or other announcements.
The most recent update was about one month ago where Appen revealed a trading update and a business restructure.
A common concern for many has been Appen’s concentrated exposure to many international tech companies. To put these concerns to rest, management revealed that Appen will now look to support a much wider variety of customers with more revenue on a committed basis.
Appen’s business segments will also be simplified, now with just global, enterprise, China and government.
What to do with Appen’s shares?
I like the thematic around Appen and more broadly the AI industry. With so many industries wanting to leverage more data to drive further innovation, companies like Appen could likely have a durable service offering that could be around easily for the next 5-10 years at least.
That being said, this might only be the case if its customers prove to have some sort of reliance on Appen. If companies internalise and undermine Appen’s service offering, there might be some more pain on the horizon.
Appen’s new turnaround strategy has certainly implied that this isn’t the case, but for me, only the numbers will truly reveal if the long-term thesis remains intact. Appen’s shares are still a hold for me.
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