The tech stocks sell-off may be the best thing that has happened to investors looking to buy shares in tech companies that looked too expensive before the sell-off. Thanks to this sell-off, those expansive stocks are now doing double-digit discounts. Meta did about 50%, Amazon did over 25%. And our stock pick for today, Atlassian (Nasdaq: TEAM), did 33%. This sell-off will not last forever, and we believe the best time to buy Atlassian stock is close.
Source: RODNAE Productions
But let’s take a step back to tell you what Atlassian does. Atlassian is a cloud-based company that provides products that enhance collaboration on projects within companies and workspaces. These products automate basic tasks that require little or no human intelligence; you’ll be surprised at how much these tasks hinder productivity.
Atlassian’s products are integrable. In other words, you can simply own one Atlassian account and use various Atlassian products for just one project. The impressive thing about this business strategy is that a user can start with one product and just float to others. It’s easy for its clients who will enjoy having all their data in one place; and it’s good for Atlassian itself, as it gets to keep its customers within its ecosystem.
The benefit of this business strategy and other strategies the project management company has employed is evident in its financials. In its most recent quarter, Q2 FY22, the company recorded a 37% year-on-year increase in revenue to $689 million. Net Income also rose by 34% YoY to $127 million.
Source: Atlassian
These numbers are impressive because the company is mostly cloud-based, and it has to spend a lot on research, development, and marketing.
Shareholders, potential investors, and customers will be glad to know that Atlassian recently acquired Percept.AI. This acquisition will allow support teams on Atlassian to more efficiently handle tasks and scale. While this doesn’t directly translate to more income for the company, it does improve the usefulness of Atlassian, which may, in turn, attract more customers.
Technical Analysis
If you thought Atlassian was too expensive to jump on in late 2021, check again now. TEAM has shed over 40% since then. Although the stock has recovered to a 33% dip, we’re still very much in the buy zone for the Atlassian stock.
The stock made two quick touches on the $260 – $274 support level in the past 5 weeks and now hovers not far above it. This suggests that the support level is quite important, and this may be where the pullback ends for TEAM. The bulls may mount a challenge from here.
The bulls could echo a loud statement of intent if the stock breaks out of the overlying bearish trendline and the $334 – $349 resistance level.
However, there’s nothing to get excited about yet, as the $260 – $274 support level may very well fail to hold the next contact with the price. And if this happens, the $199 – $211 support level awaits the price, thus, ushering us deeper into bearish territory.
