What Happened?
Shares of design software company Autodesk (NASDAQ: ADSK) fell 10.2% in the morning session after the company reported underwhelming third-quarter results. Revenue in the quarter was just in line. Management acknowledged that growth had slowed compared to recent years. Looking ahead, the business is tracking toward the lower end of its guidance range. This implies that, without stronger performance in the upcoming quarters, the company may struggle to meet its projections. By the market reaction, it seems like stronger beats and/or guidance were perhaps expected.
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What The Market Is Telling Us
Autodesk’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. Moves this big are rare for Autodesk and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock dropped 7.8% on the news that the company provided an update on an ongoing internal investigation, which will delay filing its annual report for the year ended January 31, 2024 within the grace period provided by the SEC (Securities and Exchange Commission). In a report filed with the SEC on April 1, 2024, the company revealed it was working with outside counsel and advisers regarding its free cash flow and non-GAAP operating margin practices. The market hates uncertainty, and this update is likely to raise concerns about the business.
Autodesk is up 24.7% since the beginning of the year, but at $291.87 per share, it is still trading 9.2% below its 52-week high of $321.27 from November 2024. Investors who bought $1,000 worth of Autodesk’s shares 5 years ago would now be looking at an investment worth $1,620.
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