In the run up to the IPO for Slack Technologies Inc (NYSE:WORK), much of the news coverage centered on the Company’s decision to go public via direct offering and how it might affect Slack stock.
The questions and concerns about foregoing the usual route where banks are heavily involved in pricing the securities were similar to those that were voiced when Spotify Technology (NYSE:SPOT) chose a similar path last Spring.
Even though SPOT shares have had a rough go over the past year—having not fully recovered from the selloff beginning last fall—the immediate months post initial offering saw shares rally around 30 percent.
Given the rather frothy current state of markets coupled with a particular appetite for IPOs, generally speaking, it’s reasonable to think that Slack stock has a good chance of rallying as well.
Investors have been eager to pay for growth whether it’s found in a tech company or a plant-based meat company, and in this environment, that is pretty forgiving toward even money-losing companies. Slack has a great shot at thriving.
Shares for the San Francisco-based work messaging platform have traded down over the past couple of weeks, but given promising growth across metrics, there is a good chance the lull is temporary.
Slack Is a Truly Global Company
For those concerned about U.S. growth, Slack provides a kind of diversity that is hard to find amidst tech companies. Slack boasts over 10 million worldwide daily active users across 150 countries. Over half of those DAUs come from outside the U.S.
The platform is used by over 600,000 companies to shrink time and space while increasing efficiency within organizations.
That data doesn’t lie. People across the globe are using Slack’s platform with great regularity. Over 1 billion messages per week are sent.
There is real traction here. Slack is clearly delivering on mission to make people’s working lives simpler and more productive. It’s a deceptively simple statement but difficult to execute on.
Slack has found a way through its enterprise software to understand what organizations need to become more agile. They’ve made the product intuitive and engaging.
The results speak for themselves. Slack now has more than 88,000 Paid Customers, of which more than 65 companies are ranked in the Fortune 100. Many of these Paid Customers have thousands of active users and our largest Paid Customers have tens of thousands of employees using Slack on a daily basis.
With these kinds of high profile customers and a half a million free customers that provide an huge opportunity if Slack can convert them, posting the kind of growth numbers the market wants should be no issue.
Slack Stock and Top-Line Growth
Revenue growth has been exactly what investors want to see for a high flying software company. It’s been growing by leaps and bounds: annual growth of 110 percent and 82 percent from fiscal years 2017, to 2018 and 2018 to 2019, respectively.
Despite investments in the business, Slack has managed to decrease net losses as a percentage of revenue over time as revenue growth has outpaced the growth in operating expenses. Both good signs for future profitability.
As long as Slack stock can keep delivering similar growth numbers, shareholders should be rewarded.
The Bottom Line on Slack Stock
CEO of Slack, Stewart Butterfield, is extremely bullish on Slack’s prospects at disrupting the traditional world of email. His time horizon for a migration en masse is a fast one: five to seven years. Email may still have a place in personal communication, but for corporate communication, Butterfield sees Slack dominating the space.
The name of the game is growth, and Slack stock needs to keep delivering. If it can do so, the stock should have no issues regaining its footing and joining the trajectory of other recent IPOs.
As of this writing, Luce Emerson did not hold a position in any of the aforementioned securities.
