shares ended their first day of trading at $29.96, their higher level of the day. The stock had opened at $27, above the $21 “reference price” announced by the New York Stock Exchange last night for the company’s direct listing. The stock traded 40.4 million shares, just over a quarter of total shares outstanding.
With about 154 million shares outstanding, San Francisco-based Asana (ticker: ASAN) at the close had a market capitalization of about $4.6 billion. Asana provides cloud-based project management software. The company’s founder and CEO is Dustin Moskovitz, who also was a co-founder of Facebook.
Asana recently reported revenue for its fiscal second quarter ended July 31 of $52 million, up 57% year over year, with a non-GAAP (generally accepted accounting principles) loss of $13.7 million, or 34 cents a share.
For the third quarter, the company sees revenue of $53.5 million to $54.5 million, with a non-GAAP loss of 36 to 38 cents a share. For the January 2021 fiscal year, Asana projects revenue of $210 million to $213 million, implying growth of 47% to 49%, and a non-GAAP loss of $1.30 to $1.33 a share.
At the closing price, Asana trades at a valuation of about 22 times current year sales, far below the current valuation for other cloud software companies like
(SNOW) at more than 100 times, and
(ZM) at about 60 times.
The fact that the stock started trading above the reference price is consistent with other direct listings. The most recent major direct listing was
(WORK) in June 2019, which had a reference price of $26, opened for trading at $38.50. For
(SPOT), which listed in April 2018, the reference price was $132 and the stock opened at $167.
A reference price is not the same as the IPO price in a conventional offering. In an IPO, the shares to be sold in the offering are exchanged at the stated price. But zero shares are traded at the reference price in a direct listing. As one IPO market observer told Barron’s, “the reference price is totally useless and always based on the last private market trades.”
In the company’s filings with the SEC, Asana disclosed that private market trading in its shares in August ranged from $14.24 to $28 a share, with a volume-weighted average price of $25.11. Trading averaged $17.26 a share in the quarter ended July 31, and $15.98 a share in the April quarter.
In an interview with Barron’s Asana CFO Tim Wan said there were three reasons the company chose to go public via a direct listing. The company did not need to raise more capital, he said, and the insiders did not have to take any additional dilution as they would if the company ha sold more stock. He also contends that a direct listing is “a more efficient price discovery process” than a conventional stock offering. He also says it made more sense for existing shareholders. Note that Asana’s offering is not subject to a lockup period for insiders, unlike most conventional initial public offerings.
Wan said that for Asana the listing was in many ways a “marketing moment” for the company, “allowing us to raise our voice and talk to more companies over time.
Wan notes that Asana’s work management software is used by 82,000 paying customers with a combined 1.3 million users, as well as another 27 million free users.
The Asana CFO noted that the company had filed confidentiality for its direct listing in February, then slowed the process with the onset of the pandemic. But the company resumed the process after it became apparently that capital markets were thriving despite the downturn – and with the pandemic serving as a tailwind for the company’s business.
also direct listed on the NYSE on Wednesday, under the symbol PLTR.
Write to Eric J. Savitz at firstname.lastname@example.org