Asana (ASAN) Shares Crash 25% as Ambitions Investment Plans Weigh on Results and Forecast, JPMorgan Downgrades to Underweight
Shares of Asana (NYSE: ASAN) are down nearly 25% in premarket trading Thursday after the company reported Q4 financial results and updated guidance.
Asana reported Q4 loss per share of 48c, compared to the loss per share of 39c in the year-ago period. The company posted revenue of $111.9 million in the quarter, up 64% YoY and above the analyst consensus of $105.3 million. Adjusted basic loss per share was reported at 25c.
For Q1 2023, Asana expects adjusted loss per share in the range of 35c to 36c, compared to the analyst expectations of 27c loss per share. The company anticipates first-quarter revenue in the range of $114.5 million to $115.5 million, above the expected $111.2 million.
For the full-fiscal 2023, Asana expects revenue from $527 million to $531 million, beating the consensus estimates of $507.2 million.
"Our fiscal year revenue growth accelerated versus the previous year, led by strength in the enterprise and strong demand across the customer base," said Dustin Moskovitz, co-founder, and CEO of Asana.
"Many of the most recognized companies in the world are choosing Asana as their platform for cross team work. Our product strategy is resonating and the addressable market is large, representing over 1.25 billion knowledge workers. We are cementing our leadership position by increasing investments further to meet this large and growing enterprise demand.
Unlike positive commentary from the CEO, JPMorgan analyst Mark Murphy downgraded to Underweight from Neutral with a price target of $32.00 per share, down from the prior $66.00.
The analyst sees a premium valuation coupled with deceleration and margin compression. In particular, Murphy outlines 6 factors that led him to downgrade ASAN to UW.
- Looking at Top Line Decel with Margin Contraction;
- Still a Rich Valuation;
- Expecting Backend-Loaded Bookings This FY;
- Space Getting More Competitive;
- Declining Cash Balance Becoming a Topic;
- Unit-Economics Thesis Has Flaws.
Piper Sandler reiterated an Overweight rating but lowered the price target to $55.00 per share from $100.00). The team of analysts at Piper is wary of the company’s ambitious investment plans, which have mainly contributed to a wider-than-expected operating loss forecast for the coming year.
“The timing of a more aggressive investment posture is tough to defend in the current risk-off environment,” analysts said in a client note.
By Senad Karaahmetovic | [email protected]