Please ensure Javascript is enabled for purposes of website accessibility

Asana Stock Soars 35% on Its IPO

By Danny Vena – Updated Sep 30, 2020 at 1:38PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company took a nontraditional path for its public debut.

Asana (ASAN -5.79%), a specialist in workplace collaboration and planning software, debuted on the public markets on Wednesday, initially soaring more than 40% from its reference price of $21 set by the New York Stock Exchange.

Investors scooped up the stock in a theme that has played out repeatedly in recent months, especially when it comes to software-as-a-service (SaaS) and cloud computing stocks, with many jumping out of the gate following their debut and far surpassing their list price. Asana shares began trading at approximately 12:34 p.m. EDT today, surging as much as 40% in the minutes after their debut. As of this writing, the stock is up 35% to about $28.35, for an implied valuation of roughly $4.2 billion.

A man in a suit with his hands cupping a cloud computing icon with a bokeh effect in the background.

Image source: Getty Images.

In recent filings with the Securities and Exchange Commission, Asana said that for the year ended Jan. 31, 2020, it generated revenue of $143 million, up 86% year over year, while its net loss more than doubled to $119 million. That trend continued into the first half of this year, as revenue of $100 million jumped 63%, while its loss of $77 million grew 151%. 

A nontraditional path

Asana opted for a direct listing, rather than the traditional initial public offering (IPO) as the vehicle for its entry into public markets. The direct public offering (DPO) has several distinct advantages for companies, especially those that don't need to raise capital.

A DPO allows early investors and insiders to cash out their investment, while avoiding both the lockout period and the dilution that accompany a typical IPO. Additionally, the company completes a number of the tasks that are customarily untaken by investment bankers, potentially saving millions of dollars in the process.

As has been the case in the small number of previous direct listings, the "reference price," which is typically based on value of the shares during the last round of private equity raised, didn't correlate to where shares began trading.

Danny Vena has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Asana, Inc. Stock Quote
Asana, Inc.
ASAN
$20.66 (-5.79%) $-1.27

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.