Why Is Asana (ASAN) Stock Down 10% Today?

  • Asana (ASAN) reported third-quarter earnings results that exceeded analysts’ consensus expectations.
  • However, Anasa disappointed investors by sharing weak forward guidance.
  • ASAN stock dropped quickly after the opening bell rang on Wall Street.
ASAN stock - Why Is Asana (ASAN) Stock Down 10% Today?

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Why would Asana (NYSE:ASAN) stock fall fast despite an earnings beat? That’s the billion-dollar question today, and the answer has to do with Asana’s current-quarter and full-year fiscal outlook. Apparently, the company is bracing for steep losses, and Asana’s investors aren’t too pleased with this downbeat forecast.

Based in San Francisco, Asana provides a work management platform. Without a doubt, it hasn’t been easy to operate a software business in 2022, as this has been the year of the Big Tech wreck.

Despite this challenging backdrop, Asana managed to grow its revenue 41% year-over-year (YOY) to $141.4 million during the third quarter of fiscal 2023. Moreover, these results slightly exceeded Wall Street’s consensus forecast.

On top of that, Asana’s quarterly earnings loss of 26 cents per share beat analysts’ expectation of a 32-cent per-share loss. So, financial traders ought to bid the Asana share price up today — right?

What’s Happening With ASAN Stock?

As often happens in the world of finance, the actual outcome is the opposite of what people may have expected. By 10:30 a.m. Eastern, ASAN stock was down by more than 10%.

How could this happen? Asana beat the Street and posted a decent top-line result, along with an earnings loss that wasn’t as bad as anticipated.

However, there’s more to the story here. Remember, investors react not only to what actually happened but also to what companies expect to happen in the future.

Thus, traders were disappointed to learn that Asana predicts a non-GAAP operating loss of $57 million to $60 million during the current quarter, along with a non-GAAP net loss per share of 27 cents to 28 cents (under specified conditions).

Furthermore, Asana is preparing for a fiscal 2023 non-GAAP operating loss of $227 million to $230 million, along with a non-GAAP net loss per share of $1.14 to $1.15 (again, under specified conditions).

Those would be steep earnings losses if they occur as expected. Therefore, ASAN stock traders are looking ahead and envisioning a challenging future. Consequently, many investors are dumping their Asana shares today despite the company’s quarterly earnings beat.

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 InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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