Centralized enterprise communication platform provider Slack Technologies (NYSE:WORK) should, on the face of it, be an obvious choice for the work-from-home trade. The onset of the novel coronavirus has precipitated a need for reliable remote communication and collaboration among team members. Thus, Slack stock should be an easy winner, right?
Not so fast. Slack’s business model was tailor-made for the era of social distancing. However, there is another competitor in this niche business, and it’s a big one. Some observers might even say that Slack’s chief rival is ruthless.
Yet, there is more to this story as Slack has a mega-sized ally of its own. Amid a head-to-head battle between conferencing and collaboration software rivals, we might discover that Slack is, indeed, no slacker.
A Closer Look at Slack Stock
There is an earnings release coming out later today, so there is no telling where the Slack stock price will be in the near future. What we can say with confidence, though, is that the price action has been choppy and frustrating.
From Sept. 5 of last year to Sept. 4, 2020, Slack stock went absolutely nowhere. Granted, there were buyable dips along the way. Nevertheless, it’s frustrating for long-term investors to lose a full year’s time with a stock that doesn’t pay dividends.
Even more disconcertingly, Slack stock was lower in early September 2020 than it was in June of last year. In other words, Slack’s shareholders haven’t necessarily been rewarded for their loyalty and patience.
One could easily conclude, then, that the work-from-home boom hasn’t really benefited Slack stock. Still, with an overview of a key partnership, perhaps we can find a reason to invest in the shares anyway.
It has been alleged that computing giant Microsoft (NASDAQ:MSFT) has shown ruthless tendencies toward its rivals. Some folks have even claimed that Microsoft may have engaged in anti-competitive practices in the past.
There is no need to debate that contentious issue here. Suffice it to say that Microsoft is, characteristically, fiercely competitive as the company jockeys for market share against Slack with its similar software package, Microsoft Teams.
It won’t be easy for Slack to keep up with the much bigger Microsoft. Seemingly acknowledging Microsoft’s ruthless drive to destroy all competition, Slack CEO Stewart Butterfield commented, “They want to kill us, as opposed to have a great product and make customers happy.”
Slack’s Big Backer
Is a murder in the offing, then? Should investors fear Microsoft Teams as the Slack killer?
Relax, ladies and gentlemen. Slack has got an ally that could arguably be even bigger than Microsoft. I’m referring to Amazon (NASDAQ:AMZN), the company that made e-commerce an essential thread in the fabric of society.
Amazon and Slack have been connected for a while as Slack’s service has run on the Amazon Web Services (AWS) cloud-based infrastructure for years. However, this year the partnership runs deeper, with Amazon’s employees all getting access to the workplace collaboration tools provided by Slack.
Additionally, as InvestorPlace contributor Mark Hake points out, Slack “will allow employees access to transcripts of calls using Amazon’s Chime video-calling service.” Potentially, this could greatly augment Slack’s bottom line and, just as importantly, fend off market-share encroachment from Microsoft.
All of this should provide solace to Slack stakeholders, both prior to and after the company’s second-quarter earnings release.
The Bottom Line
“We intend to compete and win,” declared Jared Spataro, corporate vice president for Microsoft 365, which includes Microsoft Teams. Given Microsoft’s ruthless proclivities, I tend to believe Spataro’s assertion.
But there is another company that intends to compete and win, and that’s Amazon. Slack shareholders needn’t worry about fierce competition as the Amazon connection should protect them here.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content — and crossed the occasional line — on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.