I was going to post a note on APX today, but have been overwhelmed digesting other reports. See @Rapstar's notes on broken thesis with a good justification. But I'm not there yet. Mark Brayan was very confident on the forward revenue, up 10% on the same time a year ago, even when challenged heavily in Q&A. If revenue disappoints at year end, he'd have to go in my view and then $7- will be in sight. What I don't yet understand is why the advertising revenue is relatively weak, even though global online ad spending has come roaring back in 2021.
 

So why didn't I sell? Given the overall growth of AI, the New Markets segment has performed strongly. If Global Services stabilises and even returns to modest growth and if New Markets continues to grow strongly, then selling on bad news could prove to be dumb.

I don't understand the acquisition of Quadrant, and am bothered by the lack of transparency at what was purchased. $25m+$20m with little detail might be Ok if APX was knocking it out of the park, but not given the current context.

APX has fallen down my conviction list, but for now I will hold.

Hey @Pudawocky, APX ran up on no news ahead of the results potentially driven by a few things: a) big gap between SP and consensus, b) AI and tech sector results in USA and c) wishful thinking on outperformance of other former WAAX stocks, i.e. WTC yesterday. Lots of volatility at the mo up and down in  growth stock sector. So -20% today for APX is more like -5-10% on where we were a week or two ago. When you play as a long term investor of "growth" stocks you have to consider any days movement in the context of the week, the month, the year.....

 Sentiment is very much against you in this. FWIW my view is that following successive downgrades it's best to wait for a turnaround in performance and sentiment and not worry too much if you miss the 1st 10%-20%

I hope I am wrong, but I seriously think Appen's prospects will continue to deteriorate.  I had to reply to this thread, because all me evidence was a bit all over the place (so the 3 exhibits are below), and I hate seeing sell side broker reports (who are conflicted & chasing placement fees off APX) are quoted as bull cases.  

My bear case is that AI is disrupting Appen's labelling business.   i.e. machines are training the machines.  Here is the evidence:

1. Evidence here: https://www.youtube.com/watch?v=fdtC1AxFNkk - telstra AI labelling training data. 

2. Cathie Wood says AI training data costs are dropping 68% pa.  Costs are dropping because machines are training machines and increasing competition.

3. The CTO of Facebook,  Mike Schroepfer, tweeted on May 1 the following breakthrough: 

"Here’s our new computer vision system achieving state of the art results in image segmentation, without needing any labeled training data. This new model was trained on random, unlabeled data, but quickly achieved state-of-the-art results. It’s awesome.

But it gets even more interesting. The model learned to categorize objects in images and organize them into groups based on physical properties — animal species were clearly separated, for example

What’s happening here is one of the defining AI advances of recent years — self-supervised learning — enabling new systems to develop much deeper and more generalized understandings of the data they’re trained on."

ONE COULD ARGUE AI CANNOT REPLACE ALL OF APPEN'S USE CASES. I EXPECT AI'S CAPABILITY WILL GROW EXPONENTIALLY, CHIPPING AWAY, YEAR AFTER YEAR, AT APPEN'S BUSINESS MODEL. 

I suggest holders compare Appen's revenue growth vs the growth in AI training data demand. You will find there is a disconnect, with Appen's revenue growth falling well behind AI training data demand.  Appen's market share of the training data labelling is diminishing, year by year.  

There are businesses with higher gross margins and growth rates. Why don't you invest in them instead. don't waste your time with battleground stocks like APX.