APX, the next ISD or FGO???, page-41

"I'm shocked why it's not at 40% cagr with 100 p/e, just look at the other ASX techs beating earnings and growing rapidly (covid tailwind) with mind-boggling valuations. I've lost hope for this company."

@chad987, firstly, a 40% CAGR and a 100 PE is an extraordinary growth rate and an extreme valuation, it is certainly not the norm for most stocks. I think people should be shocked when a company reaches those valuation levels, not the reverse.

However, as it so happens, the 3-year CAGR for EBITDA is indeed 39.8% and the 3-year CAGR for revenue is 53.3% (up to 31st Dec 2020). Moreover, as of 30th September 2020, the LTM PE was indeed 100.73x.

It may still be at those types of growth rates and valuations today, but, a global pandemic got in the way.

The industry is growing at circa 24% 3-year-CAGR (the growth rate of the industry for 2020 was significantly lower than this). Growth does not occur in a vacuum; if Appen can surpass the industry growth rate, then they are taking market share from other competitors.

Appen has reaffirmed guidance for 18-28% YoY growth in EBITDA. One would be hard-pressed to find a mid-cap company trading on less than 12x EV/EBITDA when EBITDA is growing at 18-28% p.a.

If previously bullish APX retail investors have "lost hope" then that might be a subtle sign that the sentiment pendulum is near one of its extremes. Particularly after the CEO's recent sale of shares, which certainly wasn't a good look from the outside in.