Slack (NYSE:WORK) fell off a cliff in early September after the enterprise communications software company reported second quarter numbers that implied that those work-from-home tailwinds are moderating. This is because Slack stock thrived amid Covid-19 thanks to the work-from-home shift .

Specifically, in the second quarter, Slack’s revenue growth rate decelerated from the first quarter. Revenue growth is expected to slow again in the third quarter. And again in the fourth quarter.

Investors, worried that this slowdown is a sign of waning demand for Slack’s platform as employees return to the office, ditched WORK stock in early September.

But this slowdown is just a natural, not-at-all worrisome growth rate moderation after an unsustainable spike. The slowdown will end, soon. Slack will subsequently settle into a new normal of higher-than-usual growth because the shift to hybrid work environments is a permanent one.

So buy the dip in WORK stock. This one is only going higher in the long run.

Here’s a deeper look.

The Shift to Hybrid Work and Slack Stock

Make no mistake. The era of office centricity is over.

That’s not to say employees won’t ever return to the office. They will. Indeed, some already are. But it is to say that the necessity and ubiquity of offices will permanently wane going forward, as hybrid work becomes the “new normal”.

When employees were forced to work remotely in April, May and June, most businesses realized that their employees didn’t lose any productivity when they worked from home. Actually, many businesses discovered that their employees are more productive when working at home, since they are more comfortable and there are fewer distractions.

Sure, a 100% work-from-home environment has huge social and emotional costs. Plus, it’s nice to have a face-to-face meeting every once in a while. But the productivity gains of remote work cannot be ignored, nor can the potential savings from businesses being able to potentially downsize and reduce rent costs.

Thus, the future of work is hybrid work. You still go to the office. But only two to three days a week. The other days you work from home. Some employees may even be permanent work-from-home.

Those who go in are on a rotating schedule so that businesses can appropriately downsize and save money without making space too tight. Meetings become a 50/50 mix of Zoom (NASDAQ:ZM) calls and in-person meetings.

That’s the future.

And in that future, Slack is a mission-critical communications platform which will reach enterprise ubiquity.

Slack Is a Strong Play on a Hybrid Work Future

Slack provides a digital enterprise communication platform which allows employees to talk and collaborate, regardless of where they are located.

Such platforms will become increasingly important and, yes, even necessary in the new world of hybrid work — since, after all, communication is the fabric upon which we do work.

The competition in this space is fierce. Microsoft (NASDAQ:MSFT) Teams is perhaps Slack’s the best known competitor, but there are many, many others.

Still, Slack is differentiated from the competition in terms of brand (Slack is so recognizable as a communication platform that is has become a verb, wherein “Slack it” is something people say often now), integrations (Slack has multiple integrations with other enterprise work ecosystems, the sum of which make it compatible and value-additive for every organization) and UI (Slack’s interface is so straightforward, very easy to use and easy on the eyes).

Thus, Slack forever projects as a leader in the increasingly mission-critical digital enterprise communication platform market — a dynamic which implies that Slack will sustain robust growth for many years to come, and that WORK stock is a great buy for long-term investors.

Long-Term Upside in Slack Stock

The numbers point to healthy long-term upside in WORK stock. Post-2020, it is likely that Slack will settle into a cadence of adding roughly 5,000 new paid customers per quarter.

That cadence is sustainable for the next 5 to 10 years, mostly because Slack has very low market penetration (just 130,000 paid customers, out of 3+ million small businesses in the company’s core markets that could use Slack’s communication platform). Assuming so, Slack’s customer base should grow at a ~10% compounded annual growth rate into 2030.

Average revenue per customer should continue to trend higher, thanks to price hikes, an increase in seats per customer and an increase in per seat usage. Assuming ~5% compounded annual growth on average revenue per customer, Slack’s total revenues should power higher at ~15% annualized pace over the next decade.

Profit margins will expand with scale, mostly because this is a 90% gross margin business with tons of room for sustained big revenue growth to drive positive operating leverage. Operating margins have a realistic opportunity to settle around 30% by 2030.

Putting those assumptions together, my modeling suggests that $1.50 in earnings per share is entirely doable for Slack by 2030.

Based on a 35X forward earnings multiple, that implies a 2029 price target for WORK stock of over $50.

Bottom Line on WORK Stock

Slack is a strong play on the permanent shift to hybrid work environments.

Plus, the valuation on WORK stock is now attractively discounted relative to the company’s long-term growth prospects.

All in all, then, WORK stock is the right stock, at the right price.

That means it’s time to buy the dip.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.