The Appen Ltd (ASX: APX) share price has fallen 8% in early trade after coming out of its trading halt.
Appen provides data for machine learning and artificial intelligence. Basically, it provides and improves data for the development of artificial intelligence and machine learning products. With more than 20 years of experience in over 130 countries, Appen has firmly established itself as a global leader in this space.
Why Appen shares are down 8%
The Appen share price has fallen to $22.44 at the time of writing due to the effects of it acquisition of US based machine learning software platform business Figure Eight.
Management believe the acquisition will improve the quality of Appen’s revenue and the breadth of its customer base.
To pay for the US175 million acquisition cost, Appen endeavoured to raise $285 million from institutional investors at $21.50 per share and a further $15 million from regular investors.
This morning Appen announced it was successful with its institutional capital raising, with the settlement of the placing expected to occur by this Friday, 15 March 2019, with allotment expected to occur on Monday, 18 March 2019.
Appen’s CEO and Managing Director, Mark Brayan
, said: “The placement was well supported by our existing institutional shareholders, and also saw Appen welcome a number of new institutional investors onto the register.”
What remains of the capital raising is the share purchase plan (SPP) for regular investors who held shares on 8 March 2019. Each shareholder can acquire up to $15,000 of new Appen shares at the lower of the $21.50 placement price or a 2% discount to the value the shares trade at over the five days to the closing date of the SPP.
Is Appen a buy?
Using newly issued shares (which have performed strongly recently) to acquire a business which diversifies Appen’s earnings was a good move. However, with so much positivity now built into the share price I would not want to consider buying shares unless they were under $15.
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