Why Asana (ASAN) Stock Is Trading Up Today
What Happened:
Shares of work management software maker Asana (NYSE: ASAN) jumped 5.19% in the afternoon session after it announced CEO Dustin Moskovitz purchased $2.7 million of stock on October 17, 2023 at an average price of $19.28 per share. Moskovitz, who was a co-founder of Facebook (now Meta) and an early investor in OpenAI (creator of ChatGPT), has been on a shopping spree this month, snapping up a grand total of $34.4 million of stock over the last two weeks at an average price of $17.85 per share. Investors should note that these purchases aren't anything new for Moskovitz - he has been a consistent buyer of Asana stock when it underperforms. To illustrate how much he has bought, Moskovitz owned 36% of the company when Asana went public in 2020 - today, his stake is well north of 50%, giving him majority ownership and control of the company. Investors should see these transactions as a bullish signal as CEOs have intimate knowledge of their businesses and insights that aren't available to the rest of the market. After the initial pop the shares cooled down to $19.37, up 3.64% from previous close.
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What is the market telling us:
Asana's shares are a little volatile and over the last year have had 59 moves greater than 5%. The previous big move we wrote about was 16 days ago, when the company dropped 6.06% on the news that stocks across major indices fell as the market assessed the potential of higher rates for longer, fearing that tighter monetary policy could tip the economy into a recession. This has pushed Treasury yields to levels not seen in more than a decade. Specifically, The 10-year Treasury yield last traded at nearly 4.8%, reaching its highest level since 2007. Higher rates have a negative impact on equity valuations, as today's stock price is the present value of future cash flows discounted at a discount rate. The higher the prevailing interest rate environment, the higher that discount rate. In addition, higher rates particularly hurt higher-growth stocks such as tech names since investors must discount financials further out in the future back to the present.
Asana is up 46.1% since the beginning of the year, but at $19.37 per share it is still trading 22.6% below its 52-week high of $25.03 from June 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 $672.05.
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