This Tech Founder and CEO Has Bought $158 Million Worth of His Own Company's Shares Since June. Here's Why He Can't Get Enough of the Stock.

There are a lot of reasons for insiders to sell shares of their own company's stock. There's only one reason for them to buy it.

Asana (ASAN 3.15%) founder and CEO Dustin Moskovitz bought $158 million worth of his own company's stock over the last five months. That's a massive amount for a company with a market cap of about $4.4 billion.

To be sure, Asana shares have been beaten down by the market. The stock currently trades around 86% below its all-time high, set in late 2021. But Moskovitz certainly sees the depressed stock price as a buying opportunity. Here's why he can't get enough of his own company's stock.

Growing the top line

Despite significant macroeconomic headwinds over the past year, Asana is still growing its top line more than 20% year over year. What's more, that number could reaccelerate in the near future.

To be clear, Asana isn't the only software-as-a-service (SaaS) company that experienced such a slowdown in its top-line growth. Monday.com saw its revenue growth slow from 95% year over year in the third quarter of 2021 to 42% in the second quarter this year.

Asana expects to accelerate revenue growth through several levers.

First is a shift to bigger customers. It currently counts more than 20,000 customers spending over $5,000 per year on Asana's services. It has more than 500 customers paying it more than $100,000 per year. Both groups are growing quickly, and the average revenue run rate for these big customers is growing faster than its smaller customers.

The second factor is driving more users within existing customers. Many of Asana's customers are in the tech industry, which has notably seen a lot of layoffs in the recent past. Since Asana charges customers per "seat," i.e., employee using the software, it's seen a big decline in revenue growth. But it shows strong account retention, which means when hiring starts up again, Asana will benefit.

Of course, Asana isn't sitting around waiting for the macroeconomic environment to improve. It's seeking new ways to win seats at its existing customers by positioning more use cases across more departments. This is the land-and-expand strategy in action. It wins a customer for one use case, and then expands its business with that customer by giving them more reasons to use its software.

The last factor is pushing customers to higher tiers. That means providing more customization and features for businesses and enterprises. Large enterprise customers are more likely to need those higher tier levels, so its focus on winning more of those "core customers," as management calls them, will naturally lead to more higher-tier customers.

The profit potential is massive

Asana is currently unprofitable, but its huge gross margin opens the door for a lot of operating leverage.

Asana's gross margin is a whopping 90%. That's better than its competitors, who also happen to have very high gross margins.

But Asana produces big operating losses. Its operating margin through the first half of the year was -10%. That's in line with Monday.com and Atlassian. Management sees that improving to more than 20% long term as it leverages its operating expenses while maintaining its high gross margin profile.

This outline for reaccelerating revenue will be instrumental in achieving that goal. But the goal seems reasonable, given the large addressable market Asana plays in and its relatively low penetration rate today.

The stock is cheap

On top of the potential for management to run around the slowing revenue growth and produce strong operating leverage, the stock is extremely inexpensive.

Despite a better gross margin and comparable operating margin, Asana shares trade at a discount relative to Atlassian and Monday.com. Investors can pay just 7.1 times sales for Asana. Meanwhile, they'll pay about 12.3 times for Atlassian. Monday.com shares trade for around 10 times sales.

Asana shares are risky, but the company is showing momentum in its strategy to land big enterprise customers, expand the number of seats per customer, and push them to higher tiers of service while keeping its operating expenses in check. That's a great recipe for earnings growth, and the potential is massive.

With Moskovitz buying up millions of shares despite already having such a significant investment in the company, growth stock investors should consider adding it to their portfolio as well.