👉 Background: Atlassian is the Aussie-founded software company that builds workplace tools such as Jira, Confluence, and Trello. It listed on the Nasdaq back in 2015 with a market cap of just over $4 billion USD. By late 2021, it peaked at a valuation of more than $115 billion USD.

‍👉 What happened: Late last week, Atlassian announced its third quarter earnings and its revenue was up 14% to $1.4 billion USD. But then came the guidance for next quarter, which seriously underwhelmed investors.

‍👉 What else: Right after releasing its guidance, Atlassian announced plans to make its AI tool Rovo a free feature. The goal is to lure more users onto the cloud now so that. they can make bank later. The problem is that investors wanted the bank now. Next minute: Atlassian’s shares dropped more than 17% or $15 billion USD in value.

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‍What's the key learning?

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‍💡Markets trade on future expectations, not just past results. Despite the fact that Atlassian saw revenue up in the previous quarter, next quarter’s guidance was below below expectation.

💡Markets don’t just reward strong results - they often trade on future vibes. While the intention around its free AI product is clear, Wall Street doesn’t always have patience for the long-term plays… particularly in the current environment.

💡This has happened to maaaanny other companies too. Earlier this financial year, Snap released its first quarter results - they were much better than expected with revenue up 14% - but their share price fell 14% because they claimed they couldn’t provide guidance.