Business

Slack goes public and leaves Uber and Lyft behind

By directly listing its shares on the market, the tech company reached a market value of $19.5 billion

Slack's results after went public
  • Slack went public on June 20th and the stock closed at $38.62, giving the company a market value of $19.5 billion.
  • The company adopted an alternative way to go public bypassing the usual IPO process to achieve their goals.
  • The challenge now is to keep up Slack’s revenue growth

Many highly valued tech companies decided to go public this year, but not all of them were well received by investors. Take Uber and Lyft, for instance. Both Unicorns didn’t achieve the expected results when launched on the New York Stock Exchange (NYSE) this year.

As reported by the New York Times, shares of both companies are trading below their IPO price. At their lows, the two firms had shed about $25 billion in market value.

Slack Technologies, however, took a different path to debut on the market, making the workplace messenger service the second-most valuable technology company to reach U.S. markets this year. 

Strategy

According to Bloomberg, the company directly listed its shares on the NYSE, bypassing the usual fundraising process of an IPO and allowing shareholders to sell right away without a lockup period. 

The result? On June 20th, Slack opened at $38.50, well above the reference price of $26 that was set for the shares in the direct listing. The stock closed at $38.62, giving the company a market value of $19.5 billion.

Slack’s strategy is very similar to the one used by Spotify when the music-streaming provider went public last year. Spotify’s stock is up 13% from its reference price since then.

Bloomberg has reported that Goldman Sachs Group Inc., Morgan Stanley, and Allen & Co. advised Slack on the listing, the same trio of banks that lined up when Spotify went public.

The challenge now is to keep up Slack’s revenue growth. In an interview for Yahoo Finance, Des Traynor, Intercom’s Co-Founder and Chief Strategy Officer, explains how the company has become such a hit with businesses and can continue to expand and pick up more paying customers. Currently, Slack has over 10 million daily active users, and approximately 95,000 paying customers. 

“Slack is extremely popular with mid-size businesses that are experiencing massive growth. As these businesses grow, they will increasingly spend more with the company. In this way, the company can experience massive revenue growth without even acquiring new customers”, said Des Traynor.