It was a year to forget for the Appen Ltd (ASX: APX) share price in 2021.
The artificial intelligence (AI) data services company's shares were among the worst performers on the ASX 200 during the 12 months.
Over the period, the Appen share price lost a massive 55% of its value. This means its shares are now trading approximately 73% below the record high they reached in 2020.
Why did the Appen share price crash in 2021?
Investors were selling down Appen's shares in 2021 amid concerns over its performance and outlook.
In respect to the former, Appen's half year results in August revealed a 2% decline in revenue to US$196.6 million and a 55.1% reduction in net profit after tax to US$6.7 million.
Given the lofty multiples that the company's shares traded on, this didn't go down well with investors. They were were quick to hit the sell button despite management promising a stronger second half.
What about the future?
Also weighing heavily on the Appen share price was a broker note out of Macquarie Group Ltd (ASX: MQG). This note sparked concerns over the company's outlook.
In November, the broker downgraded Appen's shares to an underperform rating and cut the price target on them to $9.50. This implies potential downside of 14% for its shares from current levels.
Macquarie revealed that it has been speaking to industry participants and notes that there is an emerging trend which has seen some big tech companies look to bypass Appen and directly crowdsource for data annotation services.
It believes this is being driven by tighter privacy and data retention standards, which has resulted in companies revising their strategies and developing their own crowd-sourcing solutions. Macquarie fears this could reduce demand for Appen's services and downgraded its sales and earnings estimates to reflect this.
All eyes will be on the company's full year results in February. A big improvement in its performance and proof that its outlook is not bleak could bring the Appen share price back to life.
