Appen share price ASX plunged earlier on Wednesday on the back of disappointing earnings for the first quarter. The Australian stock dropped by 28.21% to A$2.29. The company’s total market cap has crashed to A$377.93 million.
Appen is Crashing
Appen share price ASX was the worst performer in Australia’s S&P/ASX 200 index on Wednesday as investors digested the company’s poor performance for the first quarter. Appen Ltd is an Australian artificial intelligence company that engages in the development of human-annotated datasets for machine learning and artificial intelligence. Most of Appen’s revenues are earned offshore and its clients include eight of the top ten largest tech companies.
Appen Ltd had previously announced earlier in February that it expected a soft start to FY23 with an expectation that the FY23 underlying profit would be materially lower than the FY22 first half. According to the company, challenging external operating and macroeconomic conditions have continued to weigh on the company.
According to the report published by the company on Wednesday, Appen’s revenue for the four months ended 30th April dipped 21% to $95.7 million compared to the previous year. Additionally, its gross profit fell 25% to $35.8 million.
Last year, Appen took a hit to its earnings on the back of spending cuts by its major clients, including Facebook, Google, and Amazon, against the backdrop of inflation and higher borrowing costs.
On Wednesday, Appen announced a raft of cost-saving initiatives that are expected to deliver annualized cost savings of about $36 million in FY24.
Appen Share Price Outlook
Appen share price ASX has been under intense pressure for the past few days, slipping 24.67% in the past week and more than 8% in the year to date. On the daily chart, the stock has managed to move below the 25-day and 50-day moving averages, while its Relative Strength Index (RSI) drops to 35, suggesting a massive selloff.
Therefore, the Appen share price is likely to continue falling in the ensuing sessions. If this happens, the next support level to watch will be $2.00. Conversely, a flip of the 50 DMA will invalidate this view.