Atlassian plunges as Piper Sandler downgrades following guidance cut, slowing user growth
Sundry Photography

Atlassian (NASDAQ:TEAM) shares lost more than 25% of their value in premarket trading on Friday after the enterprise software company cut its revenue outlook for 2023 and said user growth was slowing, prompting Piper Sandler to downgrade the stock.
Analyst James Fish cut his rating on Atlassian (TEAM) to neutral from overweight, while also slashing his price target to $148 from $283, noting that the slowdown in subscription billings, along with the miss in cloud, revenue figures and continued spending scared investors.
"Atlassian is choosing to invest behind the business still, which is taking margins and cash flow estimates lower again," Fish wrote in a note to clients. "While this is good for the long-term of the benefit, near-to-medium-term, it presents challenges for investors." 
Fish added that given the uncertainty from the global economy and the fact it's unclear when these issues might end, as well as the "lack of profitability stability near-term" and a high valuation compared to the rest of tech, the downgrade was warranted. 
Atlassian (TEAM) said it expects fiscal 2023 cloud revenue growth to be between 40% and 45% year-over-year, but gross margins should decrease modestly because of continued business mix shift to the cloud and investments to support cloud migrations.
In addition, Atlassian (TEAM) said it still expects operating margins to be in the mid-teens for the year.
The firm expects second-quarter sales to be between $835M and $855M, well below the consensus estimate of $879.58M.
Last month, Jefferies said that "winter came quick" for the software space and Atlassian (TEAM) was among the companies with the most to lose.
Analysts are mostly cautious on Atlassian (TEAM). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates TEAM a HOLD.