What Happened?

Shares of work management software maker Asana (NYSE: ASAN) jumped 8.2% in the afternoon session after peer, Monday.com reported impressive fourth-quarter results that blew past Wall Street's expectations for some of the key metrics we track, including sales, profits, and EPS (profits on a per-share basis). The company's net revenue retention rate improved, and its sales guidance for the next quarter exceeded forecasts. MNDY's strong performance suggests sustained demand for project management software, which could also benefit competitors like Asana.

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What The Market Is Telling Us

Asana’s shares are extremely volatile and have had 30 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The previous big move we wrote about was 26 days ago when the stock gained 9% on the news that the major indices soared (Nasdaq +1.9%, S&P 500 +1.6%) after the Bureau of Labor Statistics reported that core CPI (Consumer Price Index - a measure of inflation which strips out volatile food and energy prices) for December 2024 came in better than expected, rising 3.2% year over year, compared to the consensus estimate for a 3.3% increase. This means that PPI and CPI both came in slightly below expectations. It is important because the results take additional rate hikes off the table, which some investors and market participants were beginning to whisper about. 

As a reminder, the driver of a stock's value is the sum of its future cash flows discounted back to today. The result of lower interest rates, all else equal, is higher stock valuations. This is especially true for higher-growth stocks, such as those in the technology sector, where the current value depends more on cash flows many years out in the future. In addition, the earnings season is off to a strong start: Banking giants like JP Morgan and Goldman Sachs posted solid quarterly results, further lifting investor sentiment. The true test will come in the coming month or so as the bulk of large publicly-traded companies report their result.

Asana is up 19.7% since the beginning of the year, but at $23.76 per share, it is still trading 13.7% below its 52-week high of $27.52 from December 2024. Investors who bought $1,000 worth of Asana’s shares at the IPO in September 2020 would now be looking at an investment worth $825.00.

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