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Here’s why the Appen (ASX:APX) share price is sinking 6% today

Here’s why the Appen Ltd (ASX:APX) share price among the worst performers and sinking a disappointing 6% lower on Friday…
The post Here’s why the Appen (ASX:APX) share price is sinking 6% today appeared first on The Motley Fool Australia. –

The tech sector may be performing positively today, but the same cannot be said for the Appen Ltd (ASX: APX) share price.

In afternoon trade, the artificial intelligence (AI) data annotation products and solutions provider’s shares are down 6% to $13.02.

Despite this decline, the Appen share price is still up 19% since the end of last week.

Why is the Appen share price sinking today?

There appear to be a couple of catalysts for the weakness in the Appen share price today.

The first is profit taking. Prior to today, the Appen share price was up a massive 26% week to date. This strong gain was driven by improving sentiment in the tech sector and the release of a restructure and trading update.

The restructure will see Appen align its business with its product-led growth strategy and distinct customer propositions. This will mean four customer-facing business units – Global, Enterprise, China, and Government. Management believes the changes will provide greater visibility of the drivers and performance of the business.

Whereas the latter revealed that Appen is on course to achieve its FY 2021 guidance. Appen is forecasting underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of US$83 million to US$90 million in FY 2021. This represents growth of 18% to 28% year on year.

What else is weighing on its shares?

In addition to profit taking, a broker note out of the Macquarie Group Ltd (ASX: MQG) equities desk appears to have taken the wind out the sails of the Appen share price.

According to the note, the broker has retained its neutral rating but trimmed its price target down to $14.70.

Macquarie believes that Appen is still facing a battle to achieve its reiterated guidance for FY 2021. It also fears the market may be a little too optimistic at this point.

In light of this, the broker isn’t in a rush to change its rating just yet and appears to believe investors should keep their powder dry for the time being.

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The post Here’s why the Appen (ASX:APX) share price is sinking 6% today appeared first on The Motley Fool Australia.

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