Atlassian Layoffs 2023: What to Know About the Latest TEAM Job Cuts
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How should the market react to yesterday’s announcement that Atlasian (NASDAQ:TEAM) conducts a round of downsizing? One might assume that financial traders would be concerned about this development. Interestingly, TEAM stock is up this morning despite news of the Atlassian layoffs.
In case you are not familiar with the company, Atlassian is a large software developer based in Australia. The company has a market cap of $46 billion and has been in existence since 2002.
Being a large company, it’s a big deal that Atlassian is planning to lay off 500 full-time employees. This cut represents approximately 5% of the company’s workforce. As a result, Atlassian is now a member of what I call the “Big Tech Layoff Club,” which seems to be growing every day.
Atlassian co-CEOs Mike Cannon-Brookes and Scott Farquhar wrote a memo to company employees regarding the layoffs. “We need to go further to rebalance the capabilities we need to deliver on our business priorities faster,” the Co-CEOs said.
What will happen to the TEAM share?
As always, the financial markets are full of surprises. Despite news of Atlassian layoffs, which might sound like a negative development for the company, TEAM stock is up more than 1% this morning.
This could be seen as a counterintuitive response, especially since Atlassian expects “to incur approximately $70 million to $75 million in restructuring costs, primarily through the end of June,” according to a Bloomberg Report.
On the other hand, it’s possible that investors saw this coming and were prepared for the layoffs. Finally, Atlassian likely hired too many people, given that the company’s “headcount has more than tripled in the past four years.”
Also, Atlassian’s 5% headcount reduction might be viewed as less severe than some people might have anticipated. While layoffs are unfortunate, Atlassian appears to be reducing spending without taking drastic action. As such, today’s price action in TEAM stock — while seemingly counterintuitive — is likely a collective expression of relief.
At the time of publication David Model held (neither directly nor indirectly) positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are governed by InvestorPlace.com Posting Policies.