Why Atlassian Stock Soared in January
Shares of Atlassian (NASDAQ: TEAM) rose 25.6% for the month of January 2023, according to data from S&P Global Market Intelligence. The company behind project tracking and collaboration tools like Jira and Trello saw share prices take a 66.3% haircut in 2022. The stock was spring-loaded for a snappy bounce, which was unleashed by positive macroeconomic developments and accelerated by a couple of bullish analyst notes.
Atlassian's swan dive in 2022 sprung from investor fears that skyrocketing inflation and federal interest rates will make new debt more expensive. In other words, some of the safeguards that allow companies to take operating risks and grow fast are less effective than they used to be. Therefore, it's more difficult to motivate sky-high valuation multiples for risky stocks.
Those fears applied to Atlassian's stock in recent years. For example, these shares changed hands at the princely valuation of 40 times sales and 121 times free cash flow at the end of 2021. One year later, the stock had calmed down to 10 times sales and 40 times free cash flow -- still expensive, but nowhere near as lofty as the 2021 readings. Given Atlassian's history of dynamite growth, many investors were looking for bullish market signs that could support a return to rising stock prices.
Source Fool.com
