What Happened:
Shares of design software company Autodesk (NASDAQ:ADSK) fell 7.8% in the morning session after 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 advisors 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.
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What is the market telling us:
Autodesk's shares are very volatile and over the last year have had 2 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 8 months ago, when the stock gained 8.8% on the news that the company reported an impressive "beat and raise" quarter. Second quarter results surpassed analysts' expectations for key topline metrics, including revenue, billings, and remaining performance obligation ( RPO - a leading indicator of revenue). In addition, earnings per share beat Wall Street's expectations. Moving ahead, guidance came in strong, with revenue projections for the next quarter and full year exceeding expectations, with management lifting the full year growth outlook. Similarly, the full year EPS guidance was raised and came in above consensus estimates. Overall, we think this was a decent quarter, showing that the company is staying on target.
Autodesk is down 10.4% since the beginning of the year, and at $209.76 per share it is trading 21.3% below its 52-week high of $266.68 from February 2024. Investors who bought $1,000 worth of Autodesk's shares 5 years ago would now be looking at an investment worth $1,248.
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