Reuters Insider - Slack stock surges at market debut

BlockFin Holdings

21/06/2019 05:18

Click the following link to watch video: https://share.insider.thomsonreuters.com/link?entryId=1_jng6dze4&referenceId=tag:reuters.com,2019:newsml_OVAK5GMTN_930&pageId=ReutersNews
Source: Reuters Insider

Description: Shares of Slack, the fast-growing workplace messaging and
communication platform, soared nearly 50% in their public trading debut on
Thursday, valuing the company at more than $23 billion. Jillian Kitchener
reports.
Short Link: https://tmsnrt.rs/2Y1a6n3

Video Transcript:

A strong showing for Slack. The workplace messaging platform made a
blockbuster debut on the New York Stock Exchange Thursday. The stock closing
at $38.62 a share, 50% higher than the reference point set by the Exchange,
valuing the company at more than $23 billion. Slack used a rare direct listing
instead of a traditional IPO which means it does not raise fresh funds.
Reuters Correspondent Carl O’Donnell.

For a company like Slack that already has a lot of cash on their balance sheet
that isn’t burning a lot of money, they don’t really need to do an
IPO. So what a direct listing offers is a chance to tap the public market much
less expensively. You don’t need to pay bankers to go raise billions of
Dollars of capital like with an IPO. You still pay some fees but they’re
dramatically lower.

Last April, music streaming service Spotify used the direct listing method
which was perceived as a success at the time. And O’Donnell says more
companies are likely to follow, but direct listings come with risks.

Unlike a traditional IPO, you don’t have the chance to do what’s
called a road show. You don’t get to go out and meet with as many
investors. You don’t get guaranteed analyst coverage so that investors
have a chance to learn about your stock. And so there are some risks that
you’re just not going to trade as well when you first go out there.

Earlier this month, Slack which competes with platforms like Microsoft Teams
said it expects fiscal 2020 revenue to grow as much as 50%. Yet, it
anticipates a loss for the year