Asana Stock Is in Free Fall. Don’t Catch This Falling Knife Yet.


ASAN stock - Asana Stock Is in Free Fall. Don’t Catch This Falling Knife Yet.

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California-headquartered workforce-management software company Asana (NYSE:ASAN) holds great promise as a technology startup. Yet, ASAN stock looks like a toxic asset now and prospective investors should adopt a watch-and-wait policy. Don’t get me wrong — Asana has excellent potential as a business enterprise in the long-term. The company operates on the leading edge of the shift to hybrid work, as the company’s software helps many businesses solve team coordination problems.

It has been reported that Asana’s users typically spend 33% less time on emails. Furthermore, they’re 42% faster in executing business processes. So, it’s easy to see why modern businesses are eager to deploy Asana’s project management solutions. Additionally, if we focus on the company’s top-line results, we should be highly impressed with Asana. Notably, during the fourth quarter of fiscal 2022, Asana grew its revenue 64% year-over-year to $111.9 million. That’s a terrific result, no doubt — but remember, top-line results don’t tell the full story.

InvestorPlace contributor Faizan Farooque recently shed some light on a specific concern about Asana. Farooque observed that Asana “has predicted it will remain unprofitable for several years.” Farooque provided further explanation, stating, “This is not a surprise, as many startups are unprofitable until they gain traction. Analysts do not expect this trend to change for Asana any time soon.”

Thus, Asana could continue to operate in the red for quite a while. Asana’s bottom-line numbers reinforce this point. In the fourth quarter of fiscal 2022, Asana reported a GAAP operating loss of $87.1 million. That’s markedly worse than the $51 million GAAP operating loss from the fourth quarter of fiscal 2021.

Meanwhile, ASAN stock appears to be collapsing. After touching a 52-week high of $145.79 in November 2021, the stock recently fell to the $30 area. There were quick pops along the way, but it’s evident that the sellers are in control of the stock’s price action.

So, don’t feel the need to invest in Asana now, even if you’re bullish on hybrid work software in general. There may be a good time to hold Asana shares, but that time hasn’t arrived quite yet.

On the date of publication, David Moadel 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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