By Atlassian stock price continued its strong downtrend this month and is now hovering at its lowest point since August last year. TEAM plunged to a low of $149.40, down by 55% from its highest point this year. This crash has brought its market cap from over $85 billion to $40 billion.
Why Atlassian stock price has plunged
Atlassian share price has been in a strong downtrend in the past few months as concerns about its growth have continued. Its downtrend has accelerated after the company launched its acquisition of The Browser Company, the creator of Arc and Dia browsers in a $610 million deal.
It also recently acquired DX in a $1 billion deal. DX offers engineering intelligence and AI-driven productivity solutions. Atlassian hopes that these products will help to complement its existing solutions like Jira, Trello, Confluence, Loom, Compass, and Bamboo.
The most recent results showed that Atlassian’s revenue rose by 22% in the fourth quarter to $1.13 billion. This increase brought its annual revenue to $5.2 billion, up by 20% from 2024.
Analysts expect that the company’s growth will continue to decelerate in the coming quarters. The average estimate among 28 analysts is that its revenue will grow by about 18% to $1.4 billion.
The second-quarter revenue growth is expected to be 17% to $1.51 billion. Analysts believe that the annual revenue will be $6.17 billion, up by 18% from the last fiscal year, which is a sign that the company is losing momentum.
The Atlassian stock price has also plunged because of the ongoing selling by insiders. Its insiders have executed 135 sells of 989,384 shares in the last 3 months. At the current price, they have sold shares worth over $148 million. These insiders, who include the CEO, have sold over 4 million shares worth over $600 million in the last 12 months.
This selling, which seems coordinated, could be part of estate management. However, it is always hard to recommend buying shares of a company whose management is actively selling.
TEAM stock valuation analysis
Another common issue that has dragged the TEAM stock price has been in a strong downtrend is that it is highly valued. The forward price-to-earnings ratio stands at 34, which is higher than the sector median of 24. The PEG ratio has jumped to 1.70, much higher than other companies.
One of the best ways to value the company is using its rule-of-40, which looks at its growth and margins. The net income margin is minus 4.9%, while its revenue growth of about 22%. Therefore, there are signs that valuation concerns remain.
Atlassian share price technical analysis
TEAM stock price chart | Source: TradingView
The daily timeframe chart shows that the TEAM stock has been in a strong downtrend in the past few months. It has dropped from a high of $326 in March to the current $150.
The stock has formed a descending channel. It has moved below the 50-day and 100-day Exponential Moving Averages (EMA), a sign that bears are in control.
The stock has formed a descending channel. Also, the Relative Strength Index (RSI) and the Stochastic Oscillator have continued falling.
Therefore, the most likely scenario is where it continues falling as bears target the key support at $100. A move above the resistance at $160 will invalidate the bearish view.
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