Stock Story -
What Happened: Shares of work management software maker Asana (NYSE: NYSE:ASAN) fell 9.2% in the morning session after major indices declined (Nasdaq down 2.3%, while the S&P 500 index fell 1.9%) on fresh concerns about the strength of the economy after the Bureau of Labour Statistics reported non-farm payrolls for July 2024, which revealed that the U.S. economy added 114 000 jobs (versus expectations for +179,000 jobs). In addition, the data revealed that the unemployment rate rose to 4.3%, the highest since October 2021.
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. 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.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Asana? Find out by reading the original article on StockStory, it's free.
What is the market telling us: Asana's shares are very volatile and over the last year have had 34 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about a month ago, when the stock gained 11.2% on the news that 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.
Asana is down 28.1% since the beginning of the year, and at $12.75 per share it is trading 45.3% below its 52-week high of $23.31 from December 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 $443.06.
