Shares of SaaS productivity stock Asana (ASAN 3.51%) fell by as much as 23.4% in trading on Wednesday after a competitor reported earnings. It closed the session down by 23%.
There was not a lot of big news out about Asana specifically, but Monday.com (MNDY 0.85%) reported its fourth-quarter results, and investors didn't like what they saw. Revenue rose 91% to $95.5 million, but management is only guiding for revenue in the $100 million to $102 million range in the first quarter, which would be a significant slowdown in year-over-year growth to around 70% to 73%.
Investors have been worried that Asana's growth rates will slow in 2022, and this is a data point that shows for at least one competitor, that's what's likely to happen. Asana will report earnings after the market closes on March 9, so that's when we'll get more clarity from the company.
For investors in software-centric growth stocks, many of which skyrocketed in 2020 and 2021, the risk is that as the COVID-19 threat recedes and people return to spending more money on goods and services, growth in the software space will decelerate. Based on Monday.com's numbers, it looks like growth really is slowing. On the other hand, its sequential growth is still expected to be over 4.7%. That would be an incredible rate for almost any company, but it appears disappointing when it's put up by a business that has been nearly doubling revenue every year.
Shares of Asana seem to be looking for a bottom as the market adjusts its growth expectations, and it's not yet clear where that bottom will be. However, I like this company, and see Wednesday's decline as creating a great entry point for a great stock.