Why Atlassian Stock Fell 51% in the First Half of 2022
Shares of Atlassian (NASDAQ: TEAM) fell 50.9% in the first half of 2022, according to data from S&P Global Market Intelligence. The Australia-based maker of project management and collaboration tools entered this period on a high note after gaining 217% in the previous two years, but that success made Atlassian's stock an easy target when market makers backed away from high-flying growth stocks.
At the start of 2022, Atlassian shares changed hands at the lofty valuation of 117 times free cash flows and 40 times sales. Together with the aforementioned price gains in recent years, this rich valuation essentially painted a target on Atlassian's back. The stock was priced for perfection, and macroeconomic events were about to bring a lot more uncertainty and imperfection into the picture.
The company did everything it could to support the expensive share prices. Atlassian crushed Wall Street's expectations across the board in January's and April's earnings reports, exceeding Wall Street's estimates by as much as 7% on the revenue line and 47% in terms of earnings. In the recently reported third quarter, top-line sales increased by 30% year over year as the number of paying customers rose by 25%. About 42% of third-quarter revenues was retained as free cash flows. Pick your favorite business metric and you'll probably find that Atlassian delivered robust results even in this challenging market environment.
Source Fool.com
