Atlassian stock prepares for a big move: will it jump or crash after earnings?

Atlassian stock price has slumped this year and is now hovering at its lowest level since November 2018. It was trading at $69, down from the record high of $483, with, the market cap falling from over $110 billion to $18 billion today. TEAM will now be on the spotlight this week as it publishes its results.

Atlassian to release earnings on April 30

The TEAM stock price has slumped in the past few years as insiders have continued dumping the shares. Its crash accelerated this week as investors dumped software companies amid fears that their businesses will be disrupted by artificial intelligence (AI) tools.

Therefore, the upcoming earnings will show whether its growth continued in the last quarter. Wall Street analysts are upbeat that its business did well, a move that will invalidate the AI disruption view.

The average estimate among analysts is that its revenue jumped by 25% in the last quarter to over $1.7 billion. A 25% revenue growth, especially when it is not driven by acquisitions, is really good for a company that has been in business for years.

Wall Street analysts predict that its forward guidance for this quarter is that its revenue will rise by 20% to $1.64 billion, while its annual revenue will be $6.3 billion.

The most recent results showed that Atlassian’s revenue jumped by 23% to over 1.6 billion,with its cloud revenue rising by 26%. Additionally, the RPO jumped by 44% to $3.8 billion, with many of its clients using Rovo, its AI generation venture. Some of its recent clients are Expedia Group, Delivery Hero, Workday, United, Audi, and Roblox.

Still, the biggest challenge for Atlassian is its profitability. Its most recent numbers revealed that its GAAP net loss rose to $42 million from the previous $38 million. Its non-GAAP net income rose to over $320 million.

Wall Street analysts are still optimistic about the Atlassian stock price, with the average estimate among analysts being $153, which is up by 120% from the current level. Some of the most bullish analysts are from Cantor Fitzgerald, Barclays, and Oppenheimer.

We believe that the ongoing sell-off of software companies is largely unwarranted as many of them will thrive in the AI era. For example, sadly, it will become easy for the companies to save labor costs by replacing many software engineers with AI tools.

Atlassian stock price analysis

TEAM stock price chart | Source: TradingView

The weekly timeframe chart shows that the TEAM stock has dropped sharply in the past few months. It dropped to $69.25, its lowest level in years. It recently moved below the key support level at $113, its lowest point in November 2022.

The stock has remained below all moving averages and the Supertrend and Ichimoku cloud. Also, the Relative Strength Index (RSI) is moving from the oversold level and is pointing upwards.

Therefore, the stock will likely rebound and retest the important resistance level at $80. A move above that price will point to more gains towards the key point at $113. This is known as a break-and-retest pattern and will see it resume the downtrend.