Asana (ASAN) Stock Trades Down, Here Is Why

Petr Huřťák /
2023/10/03 2:36 pm EDT

What Happened:

Shares of work management software maker Asana (NYSE: ASAN) fell 6.06% in the afternoon session after stocks across major indices fell as the market assessed the potential of higher rates for longer, fearing that tighter monetary policy could tip the economy into a recession. This has pushed Treasury yields to levels not seen in more than a decade. Specifically, The 10-year Treasury yield last traded at nearly 4.8%, reaching its highest level since 2007. Higher rates have a negative impact on equity valuations, as today's stock price is the present value of future cash flows discounted at a discount rate. The higher the prevailing interest rate environment, the higher that discount rate. In addition, higher rates particularly hurt higher-growth stocks such as tech names since investors must discount financials further out in the future back to the present.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Asana? Access our full analysis report here, it's free.

What is the market telling us:

Asana's shares are very volatile and over the last year have had 61 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 previous big move we wrote about was five days ago, when the company gained 5.62% on the news that CEO Dustin Moskovitz bought $17.4 million worth of shares. This purchase increases Moskovitz's direct ownership stake in Asana to 44.95 million shares and his indirect ownership stake to 4.15 million shares, which translates into over 50% ownership by the co-founder of the business. Moskovitz's purchase of Asana stock can be considered a bullish signal, as it shows that a key insider may have increased confidence in the company's future and is willing to invest his own money in it (above and beyond his already large ownership).

Asana is up 29.7% since the beginning of the year, but at $17.23 per share it is still trading 33.8% below its 52-week high of $26.02 from October 2022. Investors who bought $1,000 worth of Asana's shares at the IPO in September 2020 would now be looking at an investment worth $596.88.

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