Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Autodesk, Inc. Plunged 23% in January

By Travis Hoium – Feb 6, 2016 at 7:21AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An analyst downgrade and CEO share sale had investors' focus on Autodesk's flaws in January.

What: It was a rough start to 2016 for Autodesk (ADSK -0.31%), with the stock falling 23% according to S&P Capital IQ data. The stock struggled with a downgrade and insider selling during the month.

So what: Analysts at Canaccord Genuity cut Autodesk's price target to $55 per share mid-month, which hurt the stock. It only added to the misery when it was disclosed that CEO Carl Bass sold 15,000 shares earlier in the month.

Now what: More worrying than an analyst downgrade and the CEO's stock sale is the company's recent financial performance. You can see below that revenue growth has stagnated and the company is now losing money. That's, in part, due to a business model change to a more subscription-based business, but it has investors concerned nonetheless.

ADSK Revenue (TTM) Chart

ADSK Revenue (TTM) data by YCharts

I don't think Autodesk's business is fundamentally broken given a steady growth in subscriptions to 2.47 million at the end of Q3 2015. But investors need to see growth translate into more on the bottom line than they're getting today. Without that, the decline may not end soon. 

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Autodesk, Inc. Stock Quote
Autodesk, Inc.
$183.99 (-0.31%) $0.57

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.