2024-02-10 08:00:00 ET
Summary
- Atlassian Corporation's stock dropped over 15% after Q2 2024 earnings despite beating revenue and earnings estimates.
- The drop was primarily due to lower cloud revenue guidance for FY 2024, indicating possible weakness in the company's cloud business.
- While Atlassian has growth drivers like cloud migrations and enterprise focus, the lack of operating leverage and profitability raise concerns for long-term value investors.
My Thesis
Earnings periods typically offer some juicy opportunities for patient investors. The market being fickle and unpredictable by nature, many investors tend to react quickly when the news is bad, thereby opening windows of opportunity that are normally hard to come by. One such case this week is Australian application platform development company Atlassian Corporation ( TEAM ), which dropped more than 15% after Q2 2024 earnings were announced on the first day of this month. At under $218 (as I write this), the stock is down from near its 52-week highs of around $258 pre-earnings. While one might be forgiven for thinking that I'm going to suggest 'buying the dip, I'm actually recommending quite the opposite, as we'll see....
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Atlassian: Lack Of Profitability And Operating Leverage Concerning