Atlassian (TEAM) stock price is at risk as co-CEOs dump shares

Atlassian (NASDAQ: TEAM) stock price has moved sideways in the past few days as investors wait for the next catalyst. The shares were trading at $159.52 on Thursday, where they have been in the past few days. This price is about 43% above the lowest point in 2022.

I am a strong believer in the idea of believing what people do and not what they say. This also applies in the financial industry, where I pay a close attention to what corporate insiders are doing. A good example of this is Silicon Valley Bank (SVB), where executives talked a lot about the strength of the business while simultaneously dumping shares.

The same situation is happening at Atlassian, the parent company of Jira and Trello. The company provides work management services that encourage collaboration within teams. In all, it serves thousands of companies internationally.

Therefore, going by the company’s executives, Atlassian is doing great and growing its market share. To back this up, the firm recently announced that it will repurchase $1 billion of its stock. Talking about its business, co-CEO Michael Brookes said:

“We maintain incredible bullishness on our position in the Work Management space. Trello continues to be a monster. Confluence continues to grow really, really strongly.”

Co-CEO Scott Farquhar said:

“We are proud of everything we have accomplished in yet another unpredictable year. 2023 will be all about helping our customers navigate these challenging times, absorbing the macro-driven impacts on our business, and setting Atlassian up for long-term success.”

However, the reality is that the company’s senior management, including the co-CEOs are actively dumping the stock. According to Barchart, insiders have sold 4.4 million shares in the past 12 months and 2.1 million in the past six months. They have dumped $1 million in the past three months. 

Going at the current TEAM stock price of $162, it means that they have sold shares worth over $712 million. Most importantly, no insider has bought shares in the past 2 months. A summary of the most recent insider sales is shown below. As you can see, the selling trend is accelerating. 

It is also worth noting that the main sellers are Scott Farquhar and Michael Brookes who are the company’s co-CEOs and co-founders.

Therefore, I believe that insiders should avoid investing in Atlassian because of the ongoing insider sales. If they were confident, they would be buying the stock as the company implements its $1 billion buyback. A likely reason for this selling is that they expect that its business growth will continue slowing in the near term.