One of the high-flying stocks that’s captured a tremendous amount of attention this year is Asana (NYSE:ASAN). This workforce management software company has seen its valuation explode, with the stock more than tripling this year alone. For investors in ASAN stock, there’s been no shortage of catalysts to rely on.
As a Software-as-a-Service (SaaS) business, Asana’s cash flows are both predictable and fast-growing. This company’s software platform has become much more highly demanded in this hybrid work environment. As companies look for ways to better manage their employees off-site and transition toward hybrid work models that increase worker satisfaction, Asana is set up to be a key beneficiary of this movement.
Of course, Asana’s impressive revenue growth of late has driven investor expectations higher. However, today, ASAN stock is down nearly 20% at the time of writing. Let’s dive into one of the key catalysts underpinning this drop.
ASAN Stock Plummets As Bond Yields Rise
Today, one of the big headlines that’s driving valuations across hypergrowth stocks lower is the re-appointment of Federal Reserve Chairman Jerome Powell. On this news, the 10-year U.S. treasury bond yield climbed more than six basis points to nearly 1.6%.
While broader markets climbed on the news, some stocks did not see reciprocal enthusiasm. Given inflation concerns partly resulting from the extended accommodative monetary and fiscal policy environment we’ve been in, bond yields appear to be reflecting the view of the market that inflation may be more persistent. Given this re-appointment, it appears the current trajectory for tapering and eventual interest rate hikes remain in order.
However, comments from Fed Vice Chair Richard Clarida on Friday have caused some concern among bond investors. Comments that a “faster pace of tapering and a more rapid removal of accommodation in 2022” have caused some concern that rates could rise faster than expected.
For high-growth stocks, this isn’t a good thing. Higher yields tend to depress valuations. And given how fast Asana’s valuation has grown, investors appear to be taking some profits on this news.
On the date of publication, Chris MacDonald did not have (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.
