On June 20th, 2019 the popular enterprise software business went public in a non-traditional method through a direct listing. Find out what this means for the $16 billion dollar tech company.
If you work in an office setting, chances are you have heard or have worked with the software sharing platform. This tool allows you to instant message and create separate channels for communication, file sharing, screen sharing, and searchable archive across all devices. A notable competitor of the software giant is Zoom Video Communications who went public this past April.
A Closer Look
Slack is only 5 years old and has claimed 10 million users on a daily basis, used by 65 of the Fortune 100, and in over 150 countries. That’s a powerful claim in the months leading up to the announcement of going public. With a projected growth rate of $590 million for 2020, Slack is gaining a 50% traction of growth when compared to the previous year’s earnings. This projects a strong pattern to continued growth, with estimators projecting almost $900 million in the 2021 fiscal year.
It was reported that Slack suffered a loss of $141 million in the past fiscal year. However, that is not deterring its estimated value rising with about 600 million shares now entering the New York Stock Exchange.
Going Public Through a Direct Listing
Slack went public on June 20th on the New York Stock Exchange under the ticker WORK, with its current 600 million shares starting at $38.62 per share. They are currently maintaining their rough value at $37.50 by the close of business on Friday, June 28th. When Slack announced they were going public, they stated it would be through a direct listing instead of the traditional manner. A direct listing means the company will not create and offer any more shares than the existing shares. Traditionally, shares are created in addition to those existing in order to raise money for the company. This means that once public, it’s up to its shareholders if they want to trade their shares. If no one wanted to, there would be none available for trade. With an opening price of $38.50 per shares, $12 higher than originally estimated at $26 per share, puts Slack’s market cap value at $17+ billion. Spotify was another company to go public through a direct listing and was successful while others like Uber and Lyft saw a loss on their share value through direct listing.
With a powerful entrance into the public stock market, and its CEO Stewart Butterfield’s innovative ideas for the company’s future (which includes the idea to do away with email entirely), Slack won’t be slowing down.