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.
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.