"The closest I came to buying my first share was when I was first invited to the IPO for $0.50. As I mentioned earlier, I invest in other areas where I can get a better ROI in the longer term. That may seem odd to share traders but it's not to an entrepreneur. I didn't buy any stock at $0.50, $3, $5, $10, $20 or $40. I started to become interested in the stock when it began to plummet."@RuJason, with all due respect, that doesn't make any sense to me. You couldn't possibly have achieved a better ROI from Appen's IPO at 50 cents in Jan 2015 to Appen's peak in Aug 2020 at $43.50. That return equates to an 8,600% increase in a mere 5.5 years. I.e. an 86 bagger. Had you invested merely $10,000 in the IPO and sold at the peak, you would have generated $860,000 AUD in profit. That is a compound annual growth rate (CAGR) of 125%, which is one of the single best returns of that time period in the entire world. For those that entered early enough, Appen was a millionaire maker.
This was made possible due to the explosive growth of the industry, which is still nascent. For the six months ended June 30, 2014, the company showed an interim net profit of $2.1 million AUD from revenue of $26.9 million AUD. Fast forward merely 5.5 years and the company reported an FY20 result of $599 million AUD and an underlying profit of circa $64m AUD. The growth in this industry has been spectacular and Appen will be the first to tell you that it is not set to stop anytime soon.
I disagree with your statement that
"It took time for investors to understand the underlying product that Appen has and the competition that already exists in the market" -- you are somewhat off the mark if you think major institutional funds invested in Appen across the past 5 years without a full understanding of Appen's product and the competitive landscape. The fall of Appen's share price is multifaceted and has not been enacted because Appen's product has suddenly been understood.
If you were so well versed in Appen's business model and the data annotation industry, I am very surprised you didn't take the opportunity to enter at IPO. For what it is worth, I don't believe you are a downramper and I do believe you have some knowledge of the industry.
But I also believe that you greatly regretted and rued the chance to have purchased shares at $0.50, $3, $5 and $10 on the way up and now you are hoping to have a second chance. Fortunately, for us, we do have an attractive entry point that has presented itself.---
P.S. These are the primary reasons behind Appen's share price fall from grace. Personally, I believe most of these issues to be temporary and not structural:
- The ongoing fall of the USD (Appen's revenue is almost entirely generated in USD)
- The evolving regulatory landscape of the US NASDAQ tech giants (Appen's customers)
- The evolving product landscape of the US NASDAQ tech giants (Appen's customers) brought about by COVID -- shifting away from existing mature AI products into newer AI products (which Appen retains an involvement in)
- Earnings downgrades commencing in late CY2020 and a conservative company outlook for CY21 relative to historical growth (with earnings back-ended into H2) [a consequence of #3 above]
- Extremely frothy tech valuations across the board in late 2020 leading to nervous and skittish investor behaviour
- The rotation of fund managers away from growth stocks back to value stocks
- Increasing competition and pricing pressure (claimed by the brokers, but I do not see material evidence of this in the relevance division and Appen have also disputed claims around pricing pressure)
- Broker downgrades (a consequence of all of the above, primarily #3, #4, #7 and fears around the rise of SSL)
Cheers and good luck,
(20min delay)