Balance sheet issues, one earnings miss, and recent board changes have contributed to massive underperformance. Following the recent selloff, should you buy the dip on Atlassian or expect more downside?
Short Trade Idea
Enter your short position between 185.08 (the intra-day low of its post-earnings sell-off) and 194.08 (the intra-day high of its post-earnings sell-off).
Market Index Analysis
- Atlassian (TEAM) is a member of the NASDAQ 100.
- This index remains near a record high with rising bearish trading volumes.
- The Bull Bear Power Indicator of the NASDAQ 100 shows a negative divergence.
Market Sentiment Analysis
Equity markets experienced a volatile session yesterday amid conflicting reports that US President Trump would fire US Federal Reserve Chair Powell. The House of Representatives passed three cryptocurrency bills in a record-setting vote, while President Trump announced that 150 countries would receive notices of tariffs ranging from 10% to 15%. He also softened his stance on China to secure a summit with President Xi Jinping. Futures are lower this morning, and investors should expect ongoing volatility.
Atlassian Fundamental Analysis
Atlassian is a proprietary software company specializing in collaboration tools for software development and project management. It employs over 12,000 employees in 14 countries, serving 300,000+ customers in over 200 countries.
So, why am I bearish on TEAM after its sell-off?
Atlassian has failed to capture the AI hype. Its balance sheet is weak, especially in the recent interest rate environment, and the company has vastly underperformed its peers and the market. Until the management team figures out how to restructure its approach to compete in the current market, I see more downside ahead for TEAM, especially during a broader market correction.
|
Metric |
Value |
Verdict |
|
PE Ratio |
N/A (negative earnings) |
Bearish |
|
PB Ratio |
36.52 |
Bearish |
|
PEG Ratio |
2.24 |
Bearish |
|
Current Ratio |
1.26 |
Bearish |
|
ROIC-WACC Ratio |
N/A (negative earnings) |
Bearish |
Atlassian Fundamental Analysis Snapshot
The price-to-earning (PE) ratio is unavailable due to negative earnings, but its Forward PE ratio is 44.64. By comparison, the PE ratio for the NASDAQ 100 is 40.77.
The average analyst price target for TEAM is 276.43. Despite its upside potential, I believe downward revisions will come this year.
Atlassian Technical Analysis
Today’s TEAM Signal
Atlassian Price Chart
- The TEAM D1 chart above shows a bearish price channel, which could lead price action lower.
- It also shows a breakdown across its descending Fibonacci Retracement Fan.
- The Bull Bear Power Indicator is bearish.
- The average trading volumes are higher during selloffs.
- TEAM corrected as the S&P 500 rallied to fresh highs, a significant bearish development.
My Call
I am taking a short position in TEAM between 185.08 and 194.08. The bearish price channel should limit any upside potential and guide price action to the downside. I will sell the rallies and see a series of lower highs and lower lows, supported by higher volumes during sell-offs.
- TEAM Entry Level: Between 185.08 and 194.08
- TEAM Take Profit: Between 154.68 and 161.08
- TEAM Stop Loss: Between 198.50 and 209.28
- Risk/Reward Ratio: 2.27
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