How to trade Slack's IPO

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How to trade Slack’s IPO

As soon as Slack goes public through an initial public offering, Slack stocks will become available for trading with Capital.com. You can trade Slack shares through contracts for difference (CFDs) and speculate on Slack’s value without the need to own the underlying shares.

In today's unstable economic environment, it may sometimes be hard to feel confident about making some investment decisions. This is why investing in CFDs can be a great idea, providing you with greater liquidity and easier execution. By choosing CFDs, you can profit from ANY price movement in Slack’s stock: you can either take a long position, speculating that the price will rise, or a short position, speculating that the price will fall.

Another advantage of trading Slack’s IPO with CFDs is leverage. Trading with leverage allows you to open and control significantly larger positions in a trade by depositing a small initial amount of capital. However, bear in mind while leverage provides the opportunity for big profits, it can also result in bigger losses.

Slack IPO date:
When will Slack go public?

Collaboration app Slack has chosen 20 June 2019 as the date for its listing to take effect on the New York Stock Exchange (NYSE). The workplace-messaging company plans to avoid a traditional public offering and instead list its shares directly on the stock exchange. Therefore, the technical term is not an IPO but rather a DPO, direct public offering. News of the Slack direct listing date came in its first official meeting with Wall Street analysts on 13 May 2019.

Firstly, the company planned on going public under the ticker symbol SK. However, in its updated prospectus published on 13 May, the company stated it has received approval from the NYSE to list its shares under the ticker WORK.

What is Slack’s valuation?

During Slack’s last round of financing in August 2018, the company sold its shares at $11.91 per share, which resulted in an approximate valuation of around $7.1 billion. However, as the company gears up to hit the markets through Slack DPO, stock activity has majorly increased on the private markets. Earlier this year, Slack disclosed that its stocks traded privately in March and April at a price as high as $25 or $26. Taking this into consideration, that would value the company at over $15 billion. According to Forge Global, some early investors and company employees have been selling shares priced around the $28 mark. At that price, the company's valuation is close to $17 billion prior to the Slack IPO.

Why is Slack going public?

Today, Slack is the dominant collaboration and workplace communication tool. Since its establishment in 2013, it has managed to eclipse almost every serious rival in its sphere. Slack is arguably Silicon Valley’s favourite of the cloud software companies to go public over the past few years.

Typically, the majority of companies go public with the aim of raising capital. Meanwhile Slack seems to be in a rather sound financial situation, reporting revenues of about $400.6 million in the fiscal year ending 31 January 2019, which is 82% higher when compared to the previous year.

In February 2019, Slack confidentially filed to go public with the Securities and Exchange Commission (SEC). Back then, the Wall Street Journal reported Slack’s intentions to pursue the unusual direct listing, also known as a DPO, rather than list through the traditional IPO process of selling shares at a set price and securing investors in advance. This move allows the company to avoid steep fees from investment banks and holding periods for insider shareholders. Direct listings are typically chosen by companies that don’t need to raise funds but want to give early investors and employees the opportunity to sell their stakes directly to new shareholders priced exclusively on demand.

Before information about the Slack IPO became public, the person familiar with the matter had said that the messaging platform company is choosing the DPO for going public as it doesn’t need the cash or publicity of an IPO.

What is Slack?

Founded by Stewart Butterfield in 2013, Slack is an American cloud-based set of team collaboration services and tools. It is a popular workplace communication hub offering messaging, calling, content sharing, polling and other means of team communications. From product designing to budget discussions to everything in between. Additionally, there is vast integration with a host of other applications, enabling you to manage your entire workflow through one platform.

Slack Fast Facts

150+ Countries
600K+ Organisations
88K+ Paid Team Accounts
65+ Companies in the Fortune 100
10 mln+ Daily Active Users
1,500+ Employees
$400.6 mln+ Revenue in the 2019 fiscal year
82% Growth rate in the 2019 fiscal year
143% Net dollar retention

What is Slack’s business model?

Slack operates a freemium business model. One of the crucial elements of the platform is the integration with other apps and tools to bring all the needed information together. As stated by the company: “Our vision is a world where organisational agility is easy to achieve, regardless of an organisation’s size. Our mission is to make people’s working lives simpler, more pleasant and more productive.” This highlights Slack’s willingness to create a larger online workspace and reduce fragmentation within tools utilised by organisations.

The majority of Slack’s revenue derives from paid subscriptions. Those subscriptions are paid either on a monthly or annual basis, depending on the number of users a company has on Slack.

Looking at the company financials, Slack has invested significant amounts in its marketing and sales efforts. The company spent almost 99% of its revenues in 2017 on marketing related activities. However, this number stabilised to 63.5% in 2018 and by 2019 it was down again to 58%.

Presently, Slack is acquiring users at a rapid pace, focusing on organic growth and product adoption. As of 31 January 2019, Slack reported over 600,000 organisations with three or more users using its services.

Who owns Slack?

No one person or institution owns Slack in its entirety. However, the company’s co-founder, CEO and chairman, Stewart Butterfield, is the single largest individual shareowner with over 43.2 million shares, equating to 8.6% of the company.

Slack’s major investors include world-renowned venture capital firms such as: Andreessen Horowitz, Accel, Social Capital, Kleiner Perkins, Spark Growth and SoftBank. The only investor with a public presence is Comcast, which has invested in Slack through its venture capital arm: Comcast Ventures.

According to Crunchbase, Slack has previously raised a total of $1.4 billion in funding over 10 rounds. Their latest funding was raised on 21 August 2018 from a Series H round.

What is an IPO?

An initial public offering is the process by which a company lists its shares for public trading. The company decides how many shares it is going to offer, and an investment bank typically estimates the initial price of the stocks based on supply and demand. After the company’s shares are listed on the stock exchange under a particular ticker symbol, these shares can be publicly traded.