ADSK - Ignore the Selloff: This Software Company Has Been Here Before
High-performing companies typically trade at premium valuations. But Wall Street can be fickle. Occasionally, shares of a great company can be had for a very average price. That's happening now with Autodesk (NASDAQ: ADSK) , the provider of design software for the engineering, architecture, and construction industries. Shares are down after the company gave weak guidance in its recent earnings presentation. It's now 44% below the all-time high from mid-2021.
The recent leg of the fall looks partly due to a change in how Autodesk bills clients. But it did something similar less than a decade ago. The stock rocketed higher in the years after that. That has me asking whether today's price is another buying opportunity.
We've seen this movie before. In 2014, the company began transitioning away from perpetual licenses -- buying compact discs with software that lasted forever once installed -- to subscription billing. The stock fell 34% as the company completed the move in 2016. It's up more than fourfold since. Looking back, the temporary impact to free cash flow is obvious, as is the rebound. But something important changed over that span.
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Ignore the Selloff: This Software Company Has Been Here Before