Why Asana (ASAN) Stock Is Trading Up Today

Adam Hejl /
2024/06/21 11:19 am EDT

What Happened:

Shares of work management software maker Asana (NYSE: ASAN) jumped 11.2% in the morning session after the company announced that its Board of Directors had approved a stock repurchase program authorizing Asana to repurchase up to $150 million of its Class A common stock through June 30, 2025. 

A company repurchasing its shares can be a signal that it thinks shares are undervalued at the current price. Chief Executive Officer Dustin Moskovitz made sure this sentiment was clear, adding that "This is a good investment opportunity for us as I believe our shares are undervalued given our immense long-term potential." 

The company also reaffirmed its previously provided guidance, confirming to markets that there will be no unexpected surprises when it reports earnings. This is reassuring to investors, given some of the shocking results reported by some enterprise software providers during the season.

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What is the market telling us:

Asana's shares are very volatile and over the last year have had 37 moves greater than 5%. But moves this big are very rare even for Asana and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The previous big move we wrote about was 9 days ago, when the stock gained 5.5% as major indices soared as yields declined after the Bureau of Labour Statistics reported CPI (Consumer Price Index - a gauge of the average price consumers pay for goods and services) for the month of May 2024 came in better than expected at 3.3% year on year (versus analysts’ expectations for 3.4%). 

The data also revealed that inflation was flat (unchanged) month on month. The inflation results benefitted from a 2% decline in the energy index, while shelter inflation remained sticky (up 0.4% m/m and 5.4% y/y). Sticky inflation is exactly what has delayed the Fed’s planned rate cuts in 2024, with some market participants likely worried that inflation might stay higher for longer. The  report eased those worries a bit. 

As a reminder, the driver of a stock's value is the sum of its future cash flows discounted back to today. With lower interest rates, investors can apply higher valuations to their stocks. No wonder so many in the investment community are optimistic about 2024. We at StockStory remain cautious, as following the crowd can lead to adverse outcomes. During times like this, it's best to own high-quality, cash-flowing companies that can weather the ups and downs of the market.

Asana is down 29.6% since the beginning of the year, and at $12.49 per share it is trading 48.8% below its 52-week high of $24.41 from July 2023. Investors who bought $1,000 worth of Asana's shares at the IPO in September 2020 would now be looking at an investment worth $433.68.

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