Atlassian Stock (TEAM) Under Pressure Ahead of Earnings In Sector Sell-Off

Atlassian's stock (NASDAQ: TEAM) is down near the low of 2025 heading into earnings, with TEAM 5.85% on the day at $174.65, and a concerning 27.8% decline since the start of the year.

Analysts expect Atlassian to deliver solid growth, with earnings per share (EPS) projected at $0.85, up from $0.66 a year earlier – an impressive 29% year-over-year improvement in profitability. Revenue is forecasted at $1.36 billion, representing a healthy nearly 20% increase from $1.13 billion last year.

So why the pullback in the stock?

Guidance in short, and a failure to recover from the tariff pullback early in the year. Whilst earnings have largely come in above expectations, mildly, guidance has missed, with the May report coming with a guidance range of $1.349B to $1.359B. The range, even at the top end was below the expectations of $1.36B.

While adjusted EPS was in line with forecasts at $0.66, and revenue grew 20.5% year-over-year to $1.132 billion, the company's soft guidance for fiscal year 2025 spooked the market. Projected revenue growth of 16%, down from 23% in the previous year, coupled with the departure of the Chief Sales Officer, triggered an 18% plunge in the stock price.

There has also been a bit of insider selling that has caused some uncertainty when the CEO sold $1.6M of shares early last month, whilst the former CEO sold shares totalling $1.675M at the time time.

Analysts have generally been lowering price targets leading into earnings. Looking at the one month build up, Capital One downgraded the stock to Equalweight (from Overweight), with a $211 price target. This came as Mizuho cut from $290 to $265 whilst keeping a Buy rating with good Q2 checks from the firm.

Keybanc have also lowered to $250 (Overweight) from $275, despite remaining bullish overall, in an alignment of FY26 EPS with management revisions. Barclays have lowered to $244 rom $260 (Overweight) expecting a solid Q2 print and a chance of guidance raise, whilst the most recent adjustment from Jefferies came in bullish.

Jefferies went as far as to say dips into earnings should be bought, with expectations that the Q4 report could have cleared the decks. The firm kept a buy rating and $262 price target on the stock.

So a lowering from Wall Street by and large, yet those targets sit a long way above the current price action in the mid $173 range. Other software names are also lower today, with Salesforce (CRM) down 3.12%, Adobe down 2.81%, and HubSpot 7.9% in the red after reporting it's own earnings.

Markets are shifting, risk is switching, and other names could begin to look more attractive with volatility expected.

Options were pricing for a 16% move off the back of earnings, yet with the stock down 6.4% on the day leading in, this one could be volatile.