Slack soars nearly 50% in its public trading debut

REUTERS:Beck Diefenbach
  • Slack is expected to debut Thursday on the New York Stock Exchange under the ticker “WORK” after the exchange set a reference point of $US26 per share.
  • The company is expected to debut through an unusual “direct listing” process at an approximate $US16 billion valuation, according to a Reuters estimate.
  • Slack’s public debut is the latest in a long line of multi-billion-dollar money-losing technology companies to hit the stock market in 2019.
  • Visit Markets Insider’s homepage for more stories.

Shares of the workplace messaging app Slack are expected to begin trading Thursday on the New York Stock Exchange as the latest high-profile, unprofitable technology company to make its public debut this year.

Slack is going public by way of a an atypical “direct listing” process, as opposed to the traditional route of an initial public offering. The NYSE set Slack’s reference point of $US26 per share on Wednesday, and was indicated to open between $US35.50 and $US36.50 per share Thursday morning.

That pricing means Slack is valued at around $US16 billion, according to Reuters.

Read more:
Inside Slack’s direct listing: Here’s what actually went down between the tech company and its Wall Street advisers

While the company’s sales growth has proved robust, it’s losing millions of dollars, which is not uncommon for a young technology company.

Slack expects revenue growth to effectively double in 2020 to between $US590 million and $US600 million, according to its quarterly earnings report filed earlier this month.

Still, Slack reported an operating loss of $US33.8 million in its first quarter, a wider loss compared to the same period last year, and expects its adjusted operating loss for 2020 to come in between $US182 million and $US192 million.

A bonus just for you:

Click here to claim 30 days of access to Business Insider PRIME

Slack is the second notable company to go public by way of a direct listing. The music streaming service Spotify debuted on the New York Stock Exchange in April 2018 through the same process, and slid in its first day of trading.

The still-private company has already garnered two ratings from Wall Street analysts – one neutral, and one bullish. Rishi Jaluria, an equity analyst with the firm D.A. Davidson, said Thursday he arrived at his neutral rating on the basis that the stock looks too expensive for his taste.

“My neutral rating is strictly valuation-based,” Jaluria said in an interview on CNBC. “My due diligence when talking to Slack customers is really positive.”

He added: “But I look at the valuation right now that Slack’s coming public at, and it’s up there with probably the most expensive names in software, like Okta or MongoDB. I just think I’d want either a more attractive entry point, or I’d want to see evidence that Slack can gain traction in other industries outside of tech or tech-forward companies.”

Read more:

When Slack goes public, it’s poised be another home run for VC firm Accel as it continues a big winning streak

Over half of Slack’s users are outside of the US, Slack CEO Stewart Butterfield told the CNBC anchor Andrew Ross Sorkin in an interview Thursday morning in front of the New York Stock Exchange. Those users outside the US comprise 35% of the company’s revenue.

When Sorkin asked Butterfield what he might count as a successful first day of trading, Butterfield said he wasn’t going to focus on every tick.

“Short-term, the markets are a voting machine, long-term they’re are a weighting machine,” he said, invoking the famed investor Benjamin Graham’s adage. “It can take time for people to figure it out and wrap their heads around a business, but I would love to have this job for the next 20 or 25 years, so hopefully the investment community will have me. That’s the time period where we’re looking to establish what we can do.”

Read more related coverage from Business Insider:

Slack’s unusual direct listing pegged at $US26 per share by NYSE for a possible $US15.7 billion valuation

This open source messaging startup raised $US50 million to take on Slack and Microsoft Teams and rope in customers who care a lot about privacy

Slack’s $US17 billion direct listing could be the IPO game-changer Silicon Valley has been waiting for. But others say it’s a techie delusion.

Slack’s direct listing casts a little-known part of Wall Street that relies on humans into the spotlight. Here’s how it will work.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.