Asana Is Plunging After Earnings. What Does That Mean for ASAN Stock?

It’s been a difficult week for many sectors, but some stocks were struggling even before reports of the omicron variant started making investors nervous. Indeed, one company that has displayed impressive share price growth throughout the year spent the entire month of November steadily declining. That company is Asana (NYSE:ASAN), and today ASAN stock plunged even further after reporting quarterly results.

Asana logo displayed on a cellphone

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What’s Happening With ASAN Stock

Last week, InvestorPlace contributor Joel Baglole warned investors that this week would bring seven earnings reports to watch. One name on that list was Asana.

Well, each earnings report has been released and so far, ASAN stock is not reacting well. Shares closed down on Friday by more than 25%.

Investor confidence in ASAN stock is clearly waning, and for good reason. Asana has seen its share fall by more than 50% within the past month and so far, signs are not pointing toward an immediate rebound. This picture looks even more bleak when we consider the fact that the company’s results for the third quarter actually surpassed expectations. The company had told investors to expect revenue to fall between $93 million and $94 million, but the number for the quarter was $100.3 million. Even after the company increased its guidance for the 2022 fiscal year, ASAN stock continued to plummet.

Why It Matters

Investors are likely wondering why ASAN stock is falling then. It seems that the concern is the potential for slowing revenue growth in the coming quarters.

ASAN stock also reacted poorly to the reappointment of Federal Reserve Board Chair Jerome Powell in mid-November, falling victim to the trap of rising Treasury yields.

That brings us to the other reasons behind ASAN stock’s recent plunge. The spread of the omicron variant has spelled trouble for the tech sector as a whole, as has this morning’s lackluster jobs report. We’ve seen the tech sector make some sharp moves today, serving as an indication that investors — both institutional and individual — are pulling back.

What It Means

The tech sector will rebound, but there’s no immediate reason to believe that ASAN stock will prove so buoyant. Investors are shying away from it after a year of hyper growth, suggesting that they are now recognizing the company has been overvalued and overhyped.

Despite a year of positive earnings reports, uncertainty continues to loom over Asana. One thing that boosted the company throughout the Covid-19 pandemic was the utility it provided for companies operating remotely. As the future of remote work hangs in the balance, so does the future of ASAN stock. Investors are making moves to pull away from it and no one is talking about buying the dip.

On the date of publication, Samuel O’Brient 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 Publishing Guidelines.

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