Activist investor Starboard Value took a $500 million stake in design software company Autodesk (NASDAQ:ADSK) and may file a lawsuit over the company’s accounting issues. This news is sending ADSK stock up.
Shares in Autodesk rose 5% over the weekend on the news. ADSK stock was due to open this morning at $237, a market capitalization of nearly $51 billion after 2023 sales of $5.5 billion.
Design Is Soft, Accounting Is Hard
Autodesk was founded in 1982 by John Walker around a design tool called AutoCAD. Its software is also used in digital prototyping and entertainment. Walker is still on the company’s board.
ADSK stock has yet to recover from the 2022 tech wreck. Its all-time high of $335 per share was achieved in August 2021. The stock fell hard in April when the company announced an internal investigation into its own accounting of free cash flow and operating margins.
Starboard had privately criticized the company for not disclosing the investigation before nominations for directors were closed in March.
Starboard is now considering legal action to either delay Autodesk’s July 16 annual meeting or re-open nominations. Betsy Rafael, who previously ran that audit committee, was recently named interim Chief Financial Officer. She replaced Deborah Clifford, who was moved to the position of Chief Strategy Officer.
The current CEO, Andrew Anagnost, got his job in 2017 after another battle with activists, with two given board seats. The activists are no longer on Autodesk’s board.
Traders at Stocktwits said Starboard’s involvement has made them extremely bullish on the stock. Analyst aggregator Tipranks considers the stock only a moderate buy.
ADSK Stock: What Happens Next?
Autodesk was a big name in the 20th century but has grown stale in the 21st century. The company issued a statement welcoming “constructive feedback” but expressing confidence in its strategic direction. Many investors are welcoming a shakeup.
On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
