One of the best performing stocks of 2021 is organization technology company Asana (ASAN 5.90%). The company has become a popular tool for large and small organizations to organize tasks, collaborations, and approvals. 

In a world that's become increasingly complex, organization tools that are elegant and simple have a lot of value. And Asana has a lot of opportunities to grow as more features are added.

A person sits at a desk at home in front of their laptop.

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Starting simple

The beauty of Asana's business is that it can start with a single user. Its organizational tools are simple enough to be appropriate for a family or very small business, which can start on a free plan.

Its value is truly unlocked when more advanced features are unlocked, which pull organizations into paid plans. The model allows for a big funnel of free users to see the product's value, while the company makes money on the most advanced users. 

You can see below that the number of customers in that paid pool has grown rather quickly. And with only 12,806 customers out of what management says is over 100,000 organizations using the product, there's plenty of room for growth as users turn toward paid solutions.

Customer Spending Number of Customers YOY Growth
$5,000+ 12,806 61%
$50,000+ 598 111%

Source: Company Filings. YOY = year-over-year

As more tools are added, Asana will engrain itself further into users' daily lives. And that'll make it a very sticky product in the long term. 

Where Asana goes from here

Asana has two paths to growth that could last for a while. You can see in the chart above that its penetration in the market is extremely low. Its lower-spending 12,806 customers account for most of its revenue. As more of Asana's market uses the product, sales should grow

Another growth path is adding features that customers will pay more for. The company recently added integration with Zoom, new languages have been rolled out, and features within the standard app have gotten more advance over the last few years. The company has three standard pricing tiers, from the free basic version up to a business plan that costs $24.99 per user per month. Enterprise plans are available as well: We should see that pricing tier increase as more features are added to the business. 

Asana is by no means cheap

Asana's stock isn't cheap by any definition. The stock is valued at over 58 times trailing sales, which sounds crazy even for a company growing as quickly as Asana. 

From a stock standpoint, this is what worries me most. The company could have a long growth runway ahead, but any hiccups, and the stock could crash. I also don't see this as a great acquisition target given its $20.5 billion market cap and relatively small customer and feature set compared to other technology companies. 

Can Asana's stock go up from here? Yes. But it's so expensive that it's not a growth stock I can jump into now. I'll keep the stock on my watchlist and look for a better entry price, but even for a great growth stock, a price-to-sales multiple around 60 is a little too hot to handle.