By Wallace Witkowski and Jeremy C. Owens
Asana Inc. was the first tech stock out of the gate of the two scheduled for their first day of trade Wednesday, quickly surging more than 30%, while Palantir Technologies Inc. still awaited its start.
Asana and Palantir were both scheduled to begin trading Wednesday morning in direct listings for two software companies with ties to Facebook Inc.
Asana began trading at 12:35 p.m. Eastern time at a price of around $27, for a valuation of roughly $4.1 billion. NYSE set a reference price of $21 for the stock. Less than 15 minutes after its first trade, Asana shares were up about 40% reaching an intraday high of $29.59.
Asana is a collaboration-software company co-founded by Facebook co-founder Dustin Moskovitz, who serves as chief executive, while Palantir is a data-software company co-founded by early Facebook (FB) investor and board member Peter Thiel. Both companies chose to list their shares directly instead of selling new stock in an initial public offering, a route that was previously taken by Spotify Technology SA (SPOT) and Slack Technologies Inc. (WORK) , which were also mature startups that sold shares repeatedly in the private markets and were looking to provide investors with public trading options.
Palantir shares had yet to begin trading at last check. The New York Stock Exchange had set a reference price of $7.50 a share based on private-market trades of the stock, and The Wall Street Journal reported last week that the company expected shares to open around $10.
Palantir launched its first software platform in 2008, and was long known as a secretive software startup focused on military and law-enforcement uses, courting controversy for its work with the Immigration and Customs Enforcement division of the U.S. government. The company has since launched a second offering that has attracted clients from the private sector (), and grown much more vocal about its business, including a public divorce from Silicon Valley ( ) in which co-founder and Chief Executive Alexander Karp detailed a move away from California and defended his company's work for the government.
See also: Five things to know about the Palantir non-IPO ()
Moskovitz launched Asana in 2008 as well, developing software tools that compete with Atlassian Corp.'s (TEAM) Trello. The San Francisco company registered $143 million in revenue in its 2020 fiscal year, up 86% year-over-year. The company also reported that losses grew, to $118.6 million in fiscal 2020 from $50.9 million in fiscal 2019.
The 700-person company, based in San Francisco reported () revenue of $52 million for the three months ended July 31, up 57% year-over-year. Its net loss during the period jumped to $41.1 million, compared with a $15.6 million loss for the same period last year. The company has yet to turn a profit.
For more: Five things you need to know about Asana's direct listing ()
Palantir is also far from profitable, revealing in its SEC filings that revenue grew to $742.6 million in 2019 from $595.4 million in 2018, while losses stayed even at more than half a billion dollars a year -- $579.6 million in 2019 and $580 million in 2018. In the first six months of this year, Palantir recorded a loss of $164.7 million on revenue of $481.2 million, after recording a loss of $280.5 million on sales of $322.7 million in the same period of 2019.
Choosing a direct listing instead of an IPO allowed both companies to publicly offer forecasts for future performance. Palantir calls for revenue growth of 46% to 47% in the third quarter, 41% to 43% for the full year of 2020, and greater than 30% in 2021. For fiscal 2021, Asana projects revenue of $210 million to $213 million, representing year-over-year growth of 47% to 49%.
Read: Software companies trying to IPO like its 1999 ()
Despite the COVID-19 pandemic, the market for IPOs has been strong in 2020. Aside from Wednesday's direct listings, Wall Street was expecting 11 IPOs this week, wrapping up the busiest third quarter for offerings since the dot-com boom (), according to Renaissance Capital. Software offerings have been a big part of that, as the pandemic has created demand for strong software offerings that can allow workers to continue performing tasks from home -- Snowflake Inc. (SNOW), Unity Software Inc. and others have flourished in their market debuts.
Exclusive: What happened as Unity Software went public during a pandemic ()
MarketWatch staff writer Jonathan Swartz contributed to this article.
-Wallace Witkowski; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
September 30, 2020 13:04 ET (17:04 GMT)
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