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What Happened:Shares of work management software maker Asana (NYSE: ASAN)
fell 5.61% in the morning session after the yield on the benchmark 10-year Treasury bond topped 5% for the first time in over 15 years. Even with relatively decent inflation readings as of late, this could mean higher rates for longer, which would make it more costly for consumers to take out mortgages and hold credit card debt while making it more expensive for businesses to take out bank loans to fund investments and projects. As a reminder, higher rates hurt equity valuations because a company’s stock price is essentially the present value of its future cash flows discounted at a discount rate. The higher the prevailing interest rate environment, the higher the discount rate. Additionally, these dynamics are more detrimental for growth stocks (like tech names) as more of the company’s value is prescribed to its long-term potential.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Asana? Find out by reading the original article on StockStory.
What is the market telling us:Asana’s shares are a little volatile and over the last year have had 59 moves greater than 5%. The previous big move we wrote about was 1 day ago, when the company gained 5.19% on the news that it announced CEO Dustin Moskovitz purchased $2.7 million of stock on October 17, 2023 at an average price of $19.28 per share. Moskovitz, who was a co-founder of Facebook (NASDAQ:META) (now Meta) and an early investor in OpenAI (creator of ChatGPT), has been on a shopping spree this month, snapping up a grand total of $34.4 million of stock over the last two weeks at an average price of $17.85 per share. Investors should note that these purchases aren’t anything new for Moskovitz – he has been a consistent buyer of Asana stock when it underperforms. To illustrate how much he has bought, Moskovitz owned 36% of the company when Asana went public in 2020 – today, his stake is well north of 50%, giving him majority ownership and control of the company. Investors should see these transactions as a bullish signal as CEOs have intimate knowledge of their businesses and insights that aren’t available to the rest of the market.
Asana is up 41.3% since the beginning of the year, but at $18.72 per share it is still trading 25.2% below its 52-week high of $25.03 from June 2023. Investors who bought $1,000 worth of Asana’s shares at the IPO in September 2020 would now be looking at an investment worth $650.17.
