Published: Sat, June 22, 2019
Markets | By Otis Pena

Slack soars to $21 billion valuation in debut after shunning IPO

Slack soars to $21 billion valuation in debut after shunning IPO

Shares of Slack Technologies Inc, the fast-growing workplace messaging and communication platform, soared almost 60 percent in their public trading debut on Thursday, valuing the company at more than $25 billion. The stock closed at $38.62, compared with the New York Stock Exchange's reference price of $26 apiece. The stock still traded up 60 per cent on its first day.

Chat platform Slack has debuted on the New York Stock Exchange. Slack is spending aggressively to maintain its growth and lost $38.4 million in the first quarter as a result. In tune with Slack's peers, the company says that it anticipates further losses in the future.

The effect is to separate the price discovery function inherent in going public from the fundraising aspect that is frequently a driver for companies, Greifeld said.

The company was hoping for a valuation of more than $10 billion in the listing, Reuters had previously reported.

"We just see an enormous opportunity", chief executive and co-founder Stewart Butterfield told CNBC Thursday shortly before ringing the opening bell of the NYSE.

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Slack likely went to the direct offering route in order for its existing shareholders to have the option to sell their shares immediately. Bloomberg Beta, the venture capital arm of Bloomberg LP, is also a Slack investor. Users can share files, build automated workflows, host video calls, poll colleagues and keep a to-do list. Butterfield said, "There are a couple hundred million people whose working lives are mediated by emails, and they would all be better off with Slack or something like it".

Slack is yet to turn a profit and its valuation dwarfs last year's $401m in sales. One, typically companies need to raise money when they list.

Slack's software is now being used by over 600,000 companies and organizations worldwide.

By contrast, Slack has become only the second big company, after Spotify, to invite a free-for-all in its shares on Wall Street. Its debut could be a bellwether for other tech listings this year. For the three months ended April 30, the company reported revenue of $134.8 million, up from $80.9 million past year. However, earlier this month Slack revealed that it now has more than 95,000 paid customers and 645 of which bring in annual recurring revenue of more than $100k.

"Direct listings are still a pretty new vehicle".

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