Is It Time To Reassess Atlassian (TEAM) After Its Steep Share Price Decline
Find your next quality investment with Simply Wall St’s easy and powerful screener, trusted by over 7 million individual investors worldwide.
If you are wondering whether Atlassian is starting to look interesting at current levels, this article will walk through what the recent share price means for the stock’s underlying value.
Atlassian’s share price closed at US$84.38, with returns of a 10.9% decline over 7 days, 36.1% decline over 30 days, 45.5% decline year to date, 73.1% decline over 1 year, 49.9% decline over 3 years, and 67.3% decline over 5 years, which naturally raises questions about how the market views its growth prospects and risk profile.
Recent coverage has focused on Atlassian as a major player in workplace collaboration and developer tools, with investors paying close attention to how demand for its products and subscription model fits into broader software sector trends. In this context, the share price performance gives you a chance to reassess how much you are willing to pay for that exposure today.
Simply Wall St currently assigns Atlassian a valuation score of 4 out of 6, reflecting the number of checks where the stock screens as potentially undervalued. Next, we will look at how different valuation approaches arrive at that view and why there may be an even better way to understand its value by the end of this article.
A Discounted Cash Flow, or DCF, model takes the cash Atlassian is expected to generate in the future and discounts those projected cash flows back to today to estimate what the business might be worth right now.
For Atlassian, the latest twelve month Free Cash Flow (FCF) is about $1.29b. Analysts and model estimates project FCF of $2.83b by 2030, using a 2 Stage Free Cash Flow to Equity approach. Near term projections, such as $1.68b in 2026 and $2.11b in 2027, come from analyst estimates, while later years are extrapolated by Simply Wall St using gradually moderating growth assumptions.
When all those future cash flows are discounted back to today, the DCF model arrives at an estimated intrinsic value of about $202.43 per share. Compared with the recent share price of $84.38, this implies the stock screens as 58.3% undervalued under these assumptions.
For companies where earnings are limited or volatile but revenue is meaningful, P/S is often a useful cross check because it compares what you pay per share with the sales the business generates.
What counts as a “normal” or “fair” P/S ratio usually reflects how the market views a company’s growth potential and risk profile, with higher expected growth and lower perceived risk often linked to higher multiples.
Atlassian currently trades on a P/S ratio of 3.86x. That sits close to the Software industry average of 3.60x, but below the peer group average of 9.60x, which suggests the market is pricing Atlassian at a discount to many comparable names.
Simply Wall St’s Fair Ratio for Atlassian is 9.78x. This is a proprietary estimate of the P/S multiple that might be appropriate given factors such as earnings growth, industry, profit margins, market cap and specific risks. Because it incorporates these company level inputs, the Fair Ratio can be more tailored than a simple comparison with peers or the broad industry.
Comparing the current 3.86x P/S to the 9.78x Fair Ratio, Atlassian appears undervalued on this metric.
Earlier we mentioned that there is an even better way to understand valuation. Narratives let you attach a clear story about Atlassian to the numbers you care about by linking your view of its future revenue, earnings and margins to a financial forecast and then to a fair value that you can easily compare with the current share price.
On Simply Wall St’s Community page, Narratives are available as an accessible tool used by millions of investors. They update automatically when new information such as news or earnings is added, so your fair value view does not stay frozen while the facts change.
For Atlassian, one investor might build a Narrative around strong AI integration, product expansion and cloud migration, leading them to a fair value near US$204.74 per share. Another might focus on risks around complex cloud migrations, competition and margins, anchoring their Narrative closer to US$145 per share. This shows how the same company can legitimately support very different but clearly articulated investment stories.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
