Appen, Entropy, DCF Models & Investor Behaviour, page-96

@thunderhead1, please see below in response to your post in the chart thread where I was tagged.

Appen has clearly outlined that they are not seeing changes in competitive dynamics nor pricing pressure.

So the question is, do you believe CEO Mark Brayan, when his public reputation is on the line or a 20-something-year-old analyst from Macquarie Bank?

The reality is that well-informed private retail investors who live and breathe stocks 24/7 are often more on the ball than analysts at the institutional banks. These firms are often staffed with sleep-deprived young staff working crazy hours and who lack passion for the markets outside of work hours.

Regarding CEO Mark Brayan's comments on competitive dynamics and pricing pressure, I will draw your attention to question 3 of the Dec 10, 2020 update call. You can listen to this at your leisure here.

SYDNEY: December 10, 2020 Trading Update:

• Q1: Lucy Wang, Bank of America: "You mentioned you are seeing a strong order book going into 2021 and secondly you mentioned the tech giants are doing new product development, how confident is Appen in winning their fair share of new projects"?
• A1: Mark Brayan: "We have more visibility than we have had in prior years. We are in close contact with the customers, the indications are more positive going into 2021 than going into 2020, which was pre-pandemic. In terms of new projects, we are already on these projects and many of them are quite diverse. We are well-positioned to benefit from this new product development. They are early stage, but we have a terrific foundation for 2021."
• Q2: Garry from RBC: "I'm trying to pull apart the fact that the major customers are spending less with you, where is this coming from?"
• A2: Mark Brayan: "To be clear, they are not spending less with us, spend from major customers is growing. We are simply not getting the strong Q4-CY2020 surge, but overall growth is up. Revenue is not going down".
• Q3: Garry from RBC: "Is competition heating up, is your market share going down or is this purely a customer behaviour issue?"
• A3: Mark Brayan: "It is, in our view, almost certainly customer behaviour, The competitive dynamics (aside from that of our major competitor Lionbridge), tend to be outside of our work with the major customers and definitely outside of our relevance programs. So our view is that this is customer behaviour and we are not losing market share. Also, we keep our eye on this through the hiring that our competitors do and so on. So we have some indicators of that. The other factor that influences the amount of work that we get is whether we are achieving our quality goals and we certainly are. For the majority of these programs, we are exceeding these goals, due to the resilience of the at-home crowd model."

Appen remains the largest holding in my portfolio and I will continue to accumulate gradually with a view towards a medium-term hold where I expect to see the share price return to the $30-$40 range. I will continue to buy if we see sub $20 per share for APX.

Looking forward to the call next week.

T.E.P.