The Appen Ltd (ASX: APX) share price has enjoyed strong returns since making its debut on the ASX.
The IPO raised $15 million from various investors with an offer price of 50 cents per share.
At today’s valuation, Appen is now worth more than $829.14 million.
Below, we take a look at the power of long-term investing. I will calculate how much you would have made if you’d invested $10,000 in Appen shares 7 years ago.
What if you had invested $10,000 into Appen shares after they made their ASX debut?
If you had invested $10,000 in Appen shares on this day in 2015, you would have bought them for around 70 cents apiece. This gives you approximately 14,285 shares, without topping up along the way.
Fast-forward to today, the current Appen share price is at $6.72. This means that those 14,285 shares would be worth an astonishing $95,995.20.
In percentage terms, the initial investment implies a return of 860% or a yearly average return of 38.14%. For context, an ASX 200 index-tracking fund would have given back 24.8% since 2015 or a yearly average of 3.23%.
What about the dividends?
Over the course, Appen has made a total of 14 dividend payments from September 2015 to March 2022. It’s worth noting that the last few dividend distributions have been relatively steady despite its shares tanking in recent times.
Adding those 14 dividend payments gives us an amount of 52.2 cents per share. Calculating the number of shares owned against the total dividend payment gives us a figure of $7,456.77.
When putting both the initial investment gains and dividend distribution, an investor would have a total amount of $103,451.97.
Should you invest $10,000 in Appen shares right now?
A couple of brokers rated Appen shares with different price points following the company’s FY21 results in February.
The first was JPMorgan, which downgraded Appen shares to neutral from overweight.
In addition, its analysts also slashed the 12-month price target by 48% to $7 per share, which is in line with today’s price.
Following suit, the team at Citi also lowered its outlook by 38% to $9.15. It appears the broker believes that Appen shares are undervalued, representing an upside of 36%.