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Why would Asana (NYSE:ASAN) Stocks Fall Rapidly Despite Falling Earnings? That’s the billion-dollar question today, and the answer has to do with Asana’s budget outlook for the quarter and full year. Apparently, the company is preparing for heavy losses and Asana investors are not very happy with these pessimistic forecasts.
Based in San Francisco, Asana provides a work management platform. Undoubtedly, it hasn’t been easy running a software business in 2022, as it was the year of the sinking of Big Tech.
Despite this challenging environment, Asana managed to grow revenue by 41% year-over-year (YOY) to $141.4 million in the third quarter of fiscal 2023. Additionally, these results have slightly exceeded the Wall Street consensus forecast.
On top of that, Asana’s quarterly profit loss of 26 cents per share beat analysts’ expectations of a loss of 32 cents per share. So, financial traders should push Asana’s stock price higher today, right?
What’s going on with ASAN stocks?
As often happens in the world of finance, the actual result is the opposite of what people expected. As of 10:30 a.m. EST, ASAN stock was down more than 10%.
How could this happen? Asana beat the street and posted a decent result, along with a revenue loss that wasn’t as bad as expected.
However, there is more to the story here. Remember that investors react not only to what actually happened, but also to what companies expect to happen in the future.
Thus, traders were disappointed to learn that Asana forecast a non-GAAP operating loss of $57 million to $60 million in the current quarter, as well as a non-GAAP net loss per share of $27 million to 28 cents (under certain conditions).
Additionally, Asana is bracing for a non-GAAP operating loss of $227-230 million in fiscal 2023, as well as a non-GAAP net loss per share of $1.14-$1.15 ( again, under specified conditions).
These would be significant revenue losses if they occur as expected. Therefore, ASAN stock traders are looking ahead and envisioning a difficult future. As a result, many investors are dumping their Asana shares today despite the company’s quarterly results.
As of the date of publication, David Moadel had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.