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Why Appian Stock Fell 13.7% Last Month

By Keith Noonan – Oct 7, 2021 at 8:27AM

Key Points

  • Appian stock slid as investors moved out of growth-dependent tech stocks in response to rising Treasury bond yields and other factors.

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The low-code software specialist's stock is now down roughly 45% in 2021.

What happened

Shares of Appian (APPN -1.39%) slumped 13.7% in September, according to data from S&P Global Market Intelligence. There wasn't any major business-specific news behind the move, but the stock lost ground as investors moved out of growth-dependent tech stocks. 

APPN Chart

APPN data by YCharts

September was a tough month for technology investors. Rising Treasury bond yields and intensifying concerns about inflation prompted investors to seek out safer alternatives, and Appian stock was caught up in the tech sector sell-off. 

A person with a tablet.

Image source: Getty Images.

So what

Growth-dependent stocks tend to get hit hard when bond yields and interest rates are rising quickly. The tech-heavy Nasdaq Composite index closed out September down roughly 5.3%. 

Barclays analyst Raimo Lenschow published a note on Appian stock on Sept. 17. While he raised his one-year price target on the stock from $77 to $90 per share, the analyst also maintained an underweight rating on Appian and noted that it could face pressure as investors look ahead to performance in 2023 as the basis for valuations. 

Now what

Appian stock has continued to slide early in this month's trading. The company's share price is down roughly 3% in October so far amid continued volatility for growth-dependent tech stocks. 

APPN Chart

APPN data by YCharts

Appian provides a low-code software platform that makes it easy for users to develop and deploy applications even if they have relatively little coding experience. Users can essentially drag and drop features in order to quickly and easily create apps. This probably isn't the kind of functionality that would be used as the foundation for consumer-facing or high-level enterprise applications, but it can be very useful for businesses that need to automate functions for internal processes. 

With businesses still carrying out digital transformations and work processes almost certain to become increasingly reliant on technology with each passing year, Appian has a favorable operating backdrop ahead. Improving workflow processes allows companies to complete projects quicker and reduce operating expenses, and Appian has posted strong customer retention (99% over the last four quarters) and established itself as an early leader in the low-code/no-code space. 

I own Appian shares in my portfolio and continue to like the company's long-term prospects. However, investors should proceed with the understanding that the software specialist's growth-dependent valuation sets the stage for potentially volatile stock pricing swings.

Appian now has a market capitalization of roughly $6.4 billion and is valued at approximately 18 times this year's expected sales. 

Keith Noonan owns shares of Appian. The Motley Fool owns shares of and recommends Appian. The Motley Fool recommends Barclays. The Motley Fool has a disclosure policy.

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Appian Stock Quote
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