Slack Technologies’ stocks opened for trading last Thursday, ending the day with a $38.50 per stock price with 45 million shares for sale. Considered as one of the top-performing public listings on the New York Stock Exchange (NYSE), the San Francisco-based tech company is now valued at $25 billion.
Assigned by the NYSE, Slack Technologies’s ticker is “WORK.” Before Thursday, analysts were projecting a stock price of $28 with a valuation of $17 billion.
Last April, Slack filed for public listing in the Securities and Exchange Commission reporting a $400.6 million revenue and $140.7 million loss last 2018. As with startups, a large portion of the loss is due to the increase in operating costs. According to Slack, the company allocated more on their sales and marketing efforts.
Despite reports of high losses and expenses, Slack boasts an increase in users since last year in a January report. Paying users, composed of a mix of individual customers and organizations, doubled in the last year with a total number of 88,000 with 575 subscribers paying for their service at $100,000 annually.
Slack’s Strategy: Direct Listing
Instead of the traditional IPO, Slack has opted for a direct listing offer to the public. Aside from the company’s shares, direct listing opens up the opportunity for early investors to sell theirs as soon as the company gets a go-signal to sell from NYSE.
The direct listing strategy is not without its risks.
In a traditional IPO, investors are confined within a lock-up period of 90 to 180 days after a stock’s launch to the public. During this time, investors cannot liquidate their stocks.
In a direct listing, the underwriting process is skipped. Early investors can join in and liquidate their stocks during the IPO. There is no group or governing body that will help stabilize, maintain, or affect the public price. In this case, if most of the investors decide to unload their stocks at a low price, the company (and its remaining investors) would be at a loss.
Based on the company’s S-1 filing, it planned to trade a minimum $100 million worth of shares. However, on Thursday, the markets closed with Slack selling 22% of accumulated shares from the company and investors.
Analysts have commented that there could be volatility in the market with this kind of strategy. Nonetheless, the company closed the stocks successfully.
Spotify, another tech-based company, was the first major company to use the direct listing strategy for its IPO launching last April 2018. It proved successful by closing its stocks at $149.01 per share with a valuation of $26.5 billion at that time.
Slack’s Business and Its Users
The company’s motto: “Slack is where work happens.”
Slack is a communication tool aiming to replace work emails. It boasts increase efficiency and breaking down communication barriers where members can send messages, data, documents–all in one convenient location. Instead of individualized inboxes, Slack operates on team-based channels.
How can businesses use it? Slack creates a channel for a particular project or topic. Members can be added at any time once its active. Instead of sending documents, data, task assignments, and any other conversations via email, the members can send it to the channel. All of the data and the progress of the project or topic can be accessed by the members.
This makes for more straightforward communication flow. Slack eradicates the chances of having to comb through email trails that, unfortunately, off-shoots whenever multiple members respond to an email at the same time.
Slack is not limited to business use. Individual users can subscribe to the service and create channels related to personal activities such as planning family reunions, coordinating school activities in a large class, and keeping in touch with old friends in various locations.
The app can be installed on laptops, mobile phones, and tablets. There’s also a web version available for when the user’s personal devices are inaccessible.
Individual users and organizations can avail of four subscription plans: Free, Standard, Plus, and Enterprise Grid. Slack has reported that it had more than 500,000 organizations using their free services plan. In January, it reports having more than 10 million daily active users in more than 150 countries.
Slack lists off both large and start-up organizations as its clients; Autodesk, Fox, and Splunk, to name a few.