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Why the Appen share price is storming higher on Friday

share price higher

The Afterpay Touch Group Ltd (ASX: APT) share price and the Kogan.com Ltd (ASX: KGN) share price may be taking the headlines today with their 13% gains, but they aren’t the only tech shares pushing notably higher.

Also making waves on the Australian share market today is the Appen Ltd (ASX: APX) share price.

In afternoon trade the language and search data services provider’s shares are up 5% to $15.57.

Why is the Appen share price on the rise today?

Appen’s shares were given a boost today from improving investor sentiment in the tech sector following a positive night of trade on Wall Street and a strong business update from Afterpay Touch.

In addition to this, investors may have responded positively to an AFR report on the company. Within the report, chief executive officer Mark Brayan spoke about the company’s plans for the future.

At present Appen has a million-strong team of remote workers that sort through data. A typical task might be sorting through a million images of streets and tagging all the street names in the images for a customer.

But in the future Brayan want to move away from pure human-annotated data to a system which has humans start the task and then machines complete it.

Mr Brayan believes this will speed up processes and allow the company to offer cheaper prices for its services. In addition to this, it will free up time for its remote workers so Appen can take on more work.

He told the AFR: “The longer-term scenario is that we become more of a tech business. The tech elements will go to growth and we’ll be able to deliver higher volumes of data, improve margins, stay ahead of competitors and win more share from them through this investment.”

Should you invest?

I think Appen is one of the best tech shares on the Australian market and if it succeeds with this plan, it will underpin its long-term earnings growth which is already very rosy.

Overall, I continue to see Appen as a share to buy with a long-term view.

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Returns as of 6th October 2020

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Appen Ltd. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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