What happened
Shares of Asana (ASAN 3.42%) surged as much as 11.5% higher on Tuesday. The maker of cloud-based collaboration tools for business teams enjoyed tailwinds from two separate events today.
So what
First, Asana's chief product officer, Alex Hood, was featured on the popular Inspired Execution podcast. Hood used this platform to highlight the disruptive potential of Asana's voice recognition and natural language processing systems. He also noted that the company eats its own dog food, meaning that Asana's collaboration and project management needs are met by using the company's own software.
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In a very different corner of today's market action, Asana also sparked a lot of discussion in various online forums. These public chats focused on the stock's high short-sale ratio of 7% and the fact that a lot of Asana option contracts are about to expire. Those technical factors seem to imply that Asana's stock could experience a dramatic short squeeze as short sellers are forced to cover their negative bets on the stock.
Now what
Hood's podcast was informative and entertaining, drawing attention to some of Asana's innate business strengths. The meme stock chatter added no information of any substance. The software-as-a-service stock has gained 300% in 2021, in large part thanks to the ongoing meme stock silliness.
This is a solid company with fantastic sales growth in a thriving target market, and I would recommend it in a heartbeat at a more reasonable price. However, I find it hard to justify buying the stock at 74 times trailing sales, because a lot of that inflated market cap is sure to fade away when the meme stock crowd turns their attention elsewhere. Patience is a virtue, even on Wall Street.
