Asana, Inc. (ASAN): A Bear Case Theory

We came across a bearish thesis on Asana, Inc. on Valueinvestorsclub.com by Laksa. In this article, we will summarize the bulls’ thesis on ASAN. Asana, Inc.'s share was trading at $13.39 as of December 2nd. ASAN’s forward P/E was 42.55 according to Yahoo Finance.

Asana, Inc., together with its subsidiaries, operates a work management software platform for individuals, team leads, and executives in the United States and internationally. ASAN is positioned as a compelling short due to overly optimistic market expectations and structural weaknesses in its core work management business.

Despite a nearly 30% decline year-to-date, the stock still trades at 4.3x EV/Expected Sales, implying sustained double-digit revenue growth and significant EBITDA margin expansion. Achieving these targets would require either broad expansion of the work management market or increased market share, both of which appear unlikely given structural disruption from AI.

While Asana has invested in its AI studio, its offering is largely undifferentiated, facing competition from major players like Google’s Vertex AI and other AI agent platforms. The market appears to reward Asana’s AI narrative, but this optimism ignores that the company’s growth has historically relied on a high-cost sales model, with customer acquisition costs far exceeding average revenue per user.

Retention metrics are weakening, with dollar-based net retention declining from 120% in 2019 to 95% in Q1 2025, signaling intensifying competitive pressure from AI-enabled productivity solutions and rival work management platforms such as Monday.com. Executives increasingly view traditional work management as non-essential, shifting budgets toward agentic AI that automates workflows end-to-end, further eroding Asana’s addressable market.

While Asana aims to evolve into a platform for human-AI coordination with “goal-oriented AI collaborators,” this ambition underscores the vulnerability of its legacy business and the likely need for substantial investment to remain competitive. With a limited cash runway of 2.5 years and positive cash flow projected only by 2028, the risk of equity dilution adds to downside pressure.

Market and retention trends, combined with AI-driven disruption, justify a potential valuation correction toward 2x EV/Expected Sales, representing roughly 50% downside from current levels, though large enterprise contracts or strategic acquisition could moderate losses.

Previously we covered a bullish thesis on Atlassian Corporation (TEAM) by Deep Value Returns in May 2025, which highlighted the company’s strong free cash flow, disciplined expense management, scalable software model, and long-term growth potential. The stock has depreciated approximately 25.96% since coverage as the thesis partly didn’t play out. Laksa shares a contrarian but emphasizes Asana’s structural weaknesses, high customer acquisition costs, and AI-driven disruption risk.

Asana, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 29 hedge fund portfolios held ASAN at the end of the second quarter which was 31 in the previous quarter. While we acknowledge the potential of ASAN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.