US$10 billion was just wiped from the value of Atlassian. How are ASX 200 tech shares responding?

Atlassian got sent to the cleaners last night…

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Key points

  • ASX tech shares are having a shaky day today
  • Could this be Atlassian's fault?
  • The US tech giant did disappoint investors mightily last night

Atlassian Corp (NASDAQ: TEAM) may be the most famous Australian company that isn't listed in Australia. Sure, the names of its founders and co-CEOs, Mike Cannon-Brookes and Scott Farquhar, may be household names in the ASX investor community at least.

That's been helped in recent times by Cannon-Brookes' ongoing moving and shaking at AGL Energy Limited (ASX: AGL). But Atlassian is, for all intents and purposes, an American company. It's listed solely on the US NASDAQ exchange after all, with no ASX presence.

But even so, Atlassian could be having an outsized impact on ASX tech shares today.

This tech company has just had a shocker over on the US markets. Atlassian shares last closed at US$174.17 each. But that was during normal trading hours. Its after-hours performance was far bleaker. In after-hours trading, Atlassian shares were down a horrible 22.6% to just UD$134.73. That would be a loss of close to US$10 billion in market capitalisation. Ouch.

The catalyst for this precipitous drop appears to be a quarterly earnings update the company put out after the close of last night's US trading session.

Atlassian shares smashed on less-than-rosy outlook

Atlassian reported US$807.4 million in revenues for the three months to 30 September, up 31%. Gross profits also rose from US517.77 million to US$668 million. However, operating income fell from US$165.43 million to US$147.9 million.

But perhaps investors were more spooked about what Atlassian had to say about its outlook:

Last quarter, we shared that we saw a decrease in the rate of free instances converting to paid plans. That trend became more pronounced in Q1. This quarter, we started seeing a slowing in the rate of paid user growth from existing customers.

The above two trends are the result of companies tightening their belts and slowing their pace of hiring. In other words, Atlassian is not immune to broader macro impacts. Our outlook assumes these trends will persist

Whatever the reasons, it is clear that investors were pretty put off by what Atlassian had to say.

So this could be why we are seeing some big gyrations in ASX tech shares today. As an Australian-run US tech company, Atlassian could be described as something of a north star for our own ASX tech shares.

Thus, it's perhaps no surprise that we saw companies like Xero Limited (ASX: XRO) and WiseTech Global Ltd (ASX: WTC) get a pounding this morning. WiseTech was down by 2.2% at one stage, while Xero had lost 1.35%.

Both of these companies have since recovered. But even now, Hub24 Ltd (ASX: HUB) and Pro Medicus Ltd (ASX: PME) are down by 3.8% and 2.9%, respectively.

Perhaps Atlassian is to blame.

Motley Fool contributor Sebastian Bowen has positions in Atlassian. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Atlassian, Hub24 Ltd, Pro Medicus Ltd., WiseTech Global, and Xero. The Motley Fool Australia has positions in and has recommended Hub24 Ltd, Pro Medicus Ltd., WiseTech Global, and Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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