Atlassian stock price has crashed into a bear market as insiders continue dumping the shares, and as concerns about its business trajectory intensified. TEAM tumbled to a low of $200, down by over 38% from its highest level this year.
Insiders are selling TEAM shares
A key reason why the Atlassian stock price has crashed is that insiders continue selling the shares this year. Scott Farquhar, the founder, sold shares worth over $1.67 million on July 7.
This sale is a continuation of the events that have occurred over the past few years. Data compiled by Barchart shows that insiders have sol 942,562 shares, currently worth over $188 million in the last three months.
These insiders have also dumped over 4 million shares worth over $800 million in the last 12 months. The top sellers are Scott and Michael Cannon-Brookes, the Chief Executive Officer.
Most importantly, no insider has bought the shares in the past 12 months, according to publicly available data.
Inside selling is often seen as a red flag in the stock market because these individuals always have more information than the other investors. Indeed, the TEAM stock price has underperformed its peer software companies since the insiders started selling the shares. TEAM stock remains 58% below the highest point in 2021.
Read more: Atlassian (TEAM) stock price is at risk as co-CEOs dump shares
Growth concerns remain amid rising competition
The name Atlassian may not be a familiar one to many people. Yet, many companies know it well because of the popularity of its products and services.
Atlassian, an Australian company, provides some well-known project management and collaboration tools like Jira, Loom, Confluence, and Trello. Over 300,000 companies use its products, which are in areas like software development, service management, and work management.
Atlassian’s business has been in a strong trajectory over the years, with its annual revenue jumping from $1.4 billion in 2020 to over $4.35 billion last year.
The challenge, however, is that its business has become highly saturated such that there are concerns about whether it will maintain its bullish trajectory. Some of the most popular competitors are the likes of Asana, Smartsheet, Notion, and Slack.
The most recent results showed that Atlassian’s revenue rose from $1.12 billion in Q3’24 to over $1.356 billion this year. Its gross margin also improved from 82.1% to 83.8%, while its cash flow from operations rose to $652 million.
Most of its revenue was in the cloud segment, followed by data centers and the marketplace. The United States is its biggest market.
Analysts are hopeful that its revenue growth will continue despite the competitive environment. The average revenue estimate is that its growth will be 19.9% to $1.36 billion, while the annual figure will get to $5.2 billion.
The best way to value Atlassian is to consider the Rule of 40 metric, which looks at the profit and growth. In its case, its forward revenue growth is 19%, while its EBITDA margin is minus 1.5%, giving it a rule-of-40 metric of 17.5%, making it overvalued.
Atlassian stock price analysis
TEAM stock price chart | Source: TradingView
The weekly chart shows that the TEAM stock price topped at $325 earlier this year and then plunged to the current $200. It is hovering at the 50-day and 200-day Exponential Moving Averages (EMA).
The stock remains below the key resistance level at $257, the highest point on June 29. It is also above the ascending trendline that connects the lowest swings since 2023.
Therefore, the stock will likely continue falling as insiders sell and a bearish pennant pattern forms. If this happens, the next level to watch will be at $136, the lowest swing on August 5.
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