Information Technology shares are leading the ASX 200 lower today and Appen Ltd (ASX: APX) shares traded as much as 5% lower earlier today.
About Appen
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 Are the Shares Trading Lower?
Appen shares are down amidst a broader market selloff that has seen the ASX 200 fall today. The Information Technology sector fell hardest, down around 2.5%, while Financials have also fallen more than 2%.
While Appen has released no news today, more general fears about the US-China trade war may be weighing on the shares.
The large American tech companies like Netflix Inc (NASDAQ: NFLX) and Amazon Inc
(NASDAQ: AMZN) traded lower overnight, so ASX shares seem to be following the crowd.
Appen does not yet have any significant activities in China, but it was stressed several times in the recent annual report
that China is a focus for Appen and could provide growth opportunities. Investors may have concerns that new regulations, tariffs, or laws could lock Appen out of this potentially lucrative market.
During market selloffs, it is common for shares with high valuations or high multiples to be affected more dramatically than shares trading on low multiples, which could be another reason the shares have been impacted so heavily.
Is This a Buying Opportunity?
There has been no news today that would appear to affect Appen directly, which could suggest that the selloff is an overreaction and could be a buying opportunity.
However, I think the selloff demonstrates the apprehension and uncertainty that investors are feeling right now and there is an argument that Appen could be materially affected by a trade war.
If I was buying Appen shares right now, it would be for a long-term hold because I think it’s fair to expect increased volatility over the next few months.
For other growth shares that could make a great long-term investment, check out the free report below.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
