![]() This is just another thing that will likely make investors less upbeat about Slack stock. So, not surprisingly, Slack stock is one of the 2019 IPOs that the SEC is probing. Slack reached its all-time high of $42 per share on its first day of trading and fell to $35 within a week. So much so, in fact, that the SEC is investigating the trading of recent IPOs, centering on the opening day of action. People are fed up with the poor results from the unicorn IPOs this year. Also, with the increasing value of big data, Slack likely can help large companies that have launched significant R&D efforts in data and AI. In light of Microsoft’s increasingly threatening position atop the cloud universe, Slack would be a nice acquisition target for a challenger. Given Slack’s natural connection with so many other leading tech companies’ platforms, it’s a natural bolt-on acquisition for a variety of larger tech players. Slack provides an easy way for users to share and aggregate information from other software, take action on notifications, and advance workflows in a multitude of third-party applications, over 1,500 of which are listed in the Slack App Directory. Slack’s prospectus note that:Īlso unlike email, Slack was designed from the ground up to integrate with external software systems. Additionally, Slack is designed to integrate easily with outside apps and software programs. It’s a strong communications tool,and thus is of great interest to leading tech companies that want to stay in constant contact with their users. For one, Slack essentially replaces e-mail for a lot of firms. The company would be a great takeover target for several reasons. However, Slack could choose to sell itself. That’s not an entirely inaccurate analogy. Some analysts have turned to portraying Microsoft and Slack as a David versus Goliath-type battle where Microsoft is the overwhelming favorite. To that end, it’s worth considering that many Microsoft Office users also are paid customers of Slack, suggesting that they can be used together. However, many of these users won’t be engaging with Teams like they would with Slack. Butterfield concedes that Microsoft may even top 50 million Teams users in coming quarters, as more Skype for Business users are forced to use Teams for services such as internet telephony. But that doesn’t mean that its user engagement levels are strong. The CEO noted that Microsoft is forcing many users to migrate to Slack from older systems, boosting its user numbers. Just look at the weak engagement numbers that Microsoft themselves report and (the) much deeper level of engagement you see among Slack users. On the company’s most recent earnings conference call, Butterfield stated that:Īlthough Microsoft markets Teams (as) a Slack competitor and there’s no doubt this causes confusion in the marketplace, in practice these are different tools, used for different purposes and our customers achieve markedly different results. CEO Stewart Butterfield took direct aim at the analysts who were suggesting that Teams is killing of Slack. That is a clear – and even existential – threat to Slack. Slack has a net revenue retention rate of 134%, which is extremely good, even by software standards. However, the company’s customer acquisition trends appear to be favorable. That trend can also be confirmed by looking at the number of paid customers, which rose by just 30% year-over-year. Based on Slack’s forward guidance, its revenue growth looks poised to dip to around 40% or so within the next year. That fell to 60% during the most recently reported quarter. Slack had been posting nearly triple-digit-percentage revenue growth around the time of its IPO. InvestorPlace - Stock Market News, Stock Advice & Trading Tips Slack’s Revenue Growth Slowdown Isn’t As Bad As It LooksĪrguably the biggest concern about Slack right now is that its revenue growth is rapidly dropping. With that in mind, let’s take a look at the contrarian, bullish case for Slack. And SaaS stocks, as a category, are heating up again after the fall selloff. SLACK stock price has started to level off after months of steady declines. That said, Slack is still growing its revenues at a dramatic clip. Already, it appears, competition is hitting the company badly. Additionally, Slack’s most recent earnings report included some worrisome signs. When a big tech giant decides to incorporate a small company’s whole reason for existence into an existing product, the small company has problems. Microsoft (NASDAQ: MSFT) is looking to take the company’s market share. Source: Sundry Photography / Īnd now, folks are lining up to predict further troubles ahead for WORK stock in 2020.
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