Shares in language technology data and services provider Appen Ltd (ASX: APX) are finding range today and are currently trading less than 1% higher at $9.48 apiece.
The Appen share price started the day well after spiking hard immediately from the open, and has since traded in an intraday range of $9.35–$9.68.
However, zooming out, shares are down 15% since January 1 and have faltered almost 58% in the last 12 months of trading, especially as ASX tech shares have taken a beating in 2022.
RBC Capital Markets is cautious on Appen
Following the earnings release of global tech juggernaut Meta Platforms Inc (NASDAQ: FB) – formerly Facebook – on Wednesday, global tech indices are now showing more signs of jitteriness.
The S&P/ASX All Technology Index (XTX) fell 112 points the day after Meta's earnings release for instance, with many ASX tech names involved with the tech giant hit hard across the board.
Not to mention that ASX tech names have already taken a beating in 2022 as some experts predict the speculative tech bubble may finally be popping.
The outcome from Meta's earnings results could be an ongoing problem for the Appen share price, according to the team at RBC Capital Markets.
Analysts at the firm dug into Meta's weaker than expected financials after it reported earnings, and Meta's weak earnings could spell trouble for Appen going forwards.
The broker notes that Meta is finding that navigating its ad-targeting landscape is far more difficult, now that devices have enabled a feature to turn off data tracking – a key issue for Appen, which specialises in data annotation.
What's more, is that Appen's sales revenue is heavily exposed to advertisers such as Meta. RBC alludes to this in its note, correctly stating that Appen's "AI-powered search relevance" – that sources and prepares data for tech and advertising companies like Meta – accounts for over 80% of domestic revenue.
Given the threat to Meta's advertising business now that device users have optionality on who tracks their data, this could bode in poorly for Appen's earnings, and consequently its share price, RBC says.
Even though the stock is trading around its single-year lows, the broker hadn't much to say about its growth prospects and retained its neutral rating with an $11 price target.
According to a list of analysts provided by Bloomberg Intelligence, the consensus price target on Appen's share price is $12.97. Although, it is yet to be seen what other brokers will have to say regarding Meta's earnings result and Appen's outlook.
Appen shares have tanked 15% in the last month after a fairly horrendous start to the year. Still, even amidst the weakness, shares have regained support this week and are up 8% in that time.
