Stock in software company Slack Technologies Inc. will soon list on the New York Stock Exchange. If you feel like you’ve missed out on the IPO buzz for this stock, you’re not exactly wrong. The company is opting out of the glitzy IPO market, choosing a quieter direct listing instead. The company filed paperwork for its listing on Friday.
Slack will trade with the ticker symbol “SK”.
What is Slack Technologies?
Many investors who work in professional industries will be familiar with Slack. For those that aren’t; it’s a software company that develops an instant messaging, collaboration, and productivity platform.
Slack boasts 10 million daily active users. The company offers free and paid subscriptions. Premium subscriptions are available for large businesses that want a customizable solution.
The company’s fiscal year ended in January, with $400 million in annual revenue. This was an 82% increase over the previous year.
Due to heavy investments in platform development, the business is still operating at a loss. The net loss in the most recent fiscal year was $140.7 million. The good news for potential investors is that it was down from $181 million in the year before.
Slack is working to optimize its pricing structure, which it admits it has “limited experience” in doing.
There’s huge opportunity for the company to improve its revenue and income. More than 500,000 organizations use Slack’s service for free. The company’s prospectus states that free accounts enable “rapid and efficient user adoption, particularly by empowering users to access Slack without the friction of payment or a formal sales interaction. We believe free usage helps prospective paid customers realize the value of Slack and users spread the word organically through their networks and organizations.”
The challenge for Slack is to better monetize its service, without alienating its user base.
Share Split Similar to Google
Slack will be a split stock when it enters the market. Class B shares will be exclusive to executives and early investment partners. Class B shares will also have 10 times the voting power of public Class A shares.
Slack has potential, especially as internet-driven collaboration becomes more important to businesses. However, there are challenges to overcome, both in terms of revenue generation and competition. Investors will need to weigh the risks of an early buy into this stock.
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