Slack’s shares are trading nearly 50% higher than the initial price.
A number of tech companies have gone public in 2019, each with varying degrees of success. When Slack went public last Thursday, the company’s shares performed better than expected.
The stock opened at $38.50, which is much higher than its initial price of $26 per share. This gives Slack a market cap of more than $19 billion.
Slack’s shares have fallen somewhat this week but remained higher than the reference price. For that reason, a Baird analyst initiated Slack as outperform on Wednesday, saying that the company is well-positioned to be competitive in the market.
Details about Slack’s direct listing
Slack offers communication tools that improve productivity and reduce companies’ reliance on traditional email. The company has been around for five years and in that time, has become a staple in workplaces across the country.
Instead of going the IPO route, Slack chose to go public with a direct listing. This means that the company made its existing stock available to the public and didn’t raise any additional funds for investors.
In a recent interview, Slack’s CFO Alan Shim said the company chose to go this route because they don’t need to raise additional funds and didn’t want to dilute existing shareholders.
Like other public tech companies, Slack has yet to turn a profit. But Shim said the company is confident that it is on the path to becoming profitable.
What to expect from Slack in 2019
Many are betting that Slack will replace email and become the dominant way teams communicate at work. But the company does face a number of hurdles. For one thing, Slack faces its share of competition from companies like Microsoft and Facebook.
But mainly, it needs to prove that it’s more than just a messaging app. Most of Slack’s customers use the company’s free service but according to Shim, many end up moving to the paid plan.
And Slack is one of the fastest growing companies in the subscription software market. The company currently has 645 customers that pay the company $100,000 a year or more. If it can find a way to increase this number, then the company should be on the path to profitability.