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KEY POINTS
OVERALL MARKET
The market ended the day in the red, but all three indices continue their overall positive 6-month streak.
The market indices ended the day in the red.
Despite the day ending in the red, this month marks a 6-month streak of positive growth in all three indices. While the new COVID delta variant and inflation create challenges, investors are continuing to push the markets further. The GDP report released yesterday wasn’t quite as good as hoped, but the 6.5% growth is still a great sign for the economy, and the market surely reflects that. GET THE DAILY MARKET RECAP
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Atlassian (TEAM) stock rose over 20% today after a great earnings report with a good forecast for the coming year.
Software company Atlassian Corp (TEAM) found itself on Stock Card’s list of winners today as its share prices rocketed up over 20% by the close. Atlassian provides management and collaboration software and earns revenue from its subscriptions and IT services.
The earnings report shows a 30% increase in revenue year-over-year and a subscription revenue growth of 50% year-over-year. The cloud revenue was up 57%, thanks to the migration of more than 1000 users in Q4 alone. In the past, investors weren't confident that cloud migration could happen as fast. That's why today's results are well-received by the market. Topping a good performance with a good forecast, management expects to see continuous growth in subscription revenue, the main source of income for Atlassian at roughly 40% each year. If you click on Atlassian's operations on its Stock Card, you'll see despite being unprofitable, it is a free cash flow generating company. The stock was already overvalued, and this price jump makes it even more expensive. That's typically the price you pay for good companies. However, I would wait for the earnings excitement to calm down before buying shares. WHAT'S DOWN?
Pinterest’s (PINS) earnings report shows growth, but a recent decline in users caused investors to doubt.
On the loser side, Pinterest (PINS) landed on Stock Card’s losers list. The stock is down 18% today. The image sharing and social media service reported its 2021 Q2 earnings yesterday, with a 125% growth in revenue and a 9% growth in monthly active users globally, year-over-year. It’s the monthly active users (MAU) that didn’t sit right with investors, though. The company may have seen growth year-over-year, but MAU is down 7% compared to last month. It's not surprising, however, to see the decline. Pinterest had an excellent uptake during the pandemic, and now things are settling down.
This is the lowest the stock has been since late May. Is this a buy-the-dip opportunity? Looking at the Stock Card, Pinterest has a decent future ahead of it. When it comes to growth, it is benefiting from a growing market. Sales have been doing great too, but the one glaring problem is the company’s profitability, as you would expect from growth companies. Like Atlassian, it's a free cash flow generating stock that you can buy at a lower price today. If you look at the reasons I had for having the stock on my watchlist, by visiting the 2021 Watchlist, you see that my wish has come true. I've had it on my watchlist for its flexibility to adopt new business models, including the partnership with Shopify (SHOP). The stock is a part of my high conviction, 2-greener watchlist that I've been monitoring for a chance to invest when the stock gets beaten down, potentially around the earnings report day. Today's price drop brings my watchlist wish true. FREEDOM PORTFOLIO
Check out Paul Essen’s portfolio, our featured investor and partner of the week.
Okay, let's wrap up by stopping by Paul Essen's portfolio. You can find it on Stock Card's Stock Picks page. Paul and his Freedom portfolio are the Featured investor and partner of the week. He is one of the best long-term investors I like to follow on Stock Card. He and I had a chat about his investment strategy earlier this week. I’ll leave a link to that conversation in the show notes. Drop by Pauls' Freedom portfolio and follow him to get notified of his buys and sells.
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