Should You Buy the Asana Direct Listing?

Along with Palantir (PLTR), Asana (ASAN) is going public with a direct listing today. The company is planning to open trading at a price of $28 per share, which would give it a valuation…

of about $4.3 billion.

Asana makes communication and collaborative tools for companies of all sizes. Its goal is to help companies become more organized, efficient, and streamline workflow and communication. Like many cloud-based software tools, the demand for its products has increased with the increase in remote work.

Company Information

Since its founding in 2008, Asana (ASAN) has become a leading player in the enterprise collaboration market. Currently, the total size of this market is estimated to be $35 billion this year but will grow to $48 billion by 2024.

Asana has 82,000 customers, 2.1 million paid users, and 3.5 million free users. Like Slack, the company has been successful in converting free users into paid users over time as companies become increasingly reliant on the platform.

Some of its major customers include AT&T (T), Google (GOOG), NASA, and AutoDesk (ADSK). About 40% of its revenue comes from outside of the US and the company is investing in international expansion.

It’s also been successful in growing the number of customers paying the company more than $50,000 per year. Based on Asana’s S-1 filing, nearly 70% of the Fortune 500 is using the free or paid version of Asana.

Its major competitors are Monday.com, Trello, Atlassian (TEAM – Rated “B” – Buy), and Smarthseet (SMAR – Rated “C” – Neutral). Project management and collaboration is a fast-growing market. Once a project management tool is adopted by a company, there’s a good chance customers stay on the platform since their data and work is already on the platform. Further, there’s a switching cost that goes up with more time.

Asana’s Story

Asana was founded by Facebook (FB) co-founder Dustin Moskovitz, and he remains the CEO. It’s a testament to his belief in this idea that he’s devoted his efforts for such a long time given that his FB proceeds give him almost limitless opportunities.

Asana is modeled after…

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