What Happened?
Shares of IT project management software company, Atlassian (NASDAQ:TEAM) jumped 6.4% in the afternoon session after stocks rebounded to start the session amid continued market volatility and moved slightly higher after the Federal Open Market Committee kept rates at 4.25% to 4.50% in its March 2025 meeting. The Jerome Powell-led committee also hinted at two more rate cuts for the year, saying, "Uncertainty around the economy has grown."
The good news is that holding rates steady and signaling two additional cuts this year means no surprises (the market dislikes surprises). The bad news is that the Fed reduced its outlook growth to 1.7%, down from the previous projection of 2.1% in December. At the same time, the inflation outlook was raised to a 2.8% annual increase for core prices, up from the prior projection of 2.5%. This suggests the Fed sees the macro tilting towards a stagflation scenario, where inflation rises as economic growth slows.
After the initial pop the shares cooled down to $230.26, up 5% from previous close.
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What The Market Is Telling Us
Atlassian’s shares are quite volatile and have had 17 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 5 months ago when the stock gained 22.9% on the news that the company reported a "beat and raise" quarter (fiscal Q1 2025). Third-quarter earnings results beat analysts' revenue expectations, with all-important Cloud segment revenue growth handily beating expectations. Its gross margin also improved.
Looking ahead, guidance was strong, with next quarter's cloud revenue growth of 27% year-on-year also above expectations and strong on an absolute basis. The company also raised its full-year revenue guidance for the Cloud and Data Center segments. There had been doubts about top line momentum, especially for Cloud revenue, so the quarter put a big dent in the bear case. Overall, this was a very solid quarter.
Atlassian is down 5% since the beginning of the year, and at $230.26 per share, it is trading 28.7% below its 52-week high of $322.94 from February 2025. Investors who bought $1,000 worth of Atlassian’s shares 5 years ago would now be looking at an investment worth $1,894.
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