Slack Goes Public : Planet Money

Slack Sets IPO Reference Point At $26 Per Share

Much like its recent IPO peers, Slack is not yet a profitable company.

The workplace collaboration player made its trading debut via direct listing on the New York Stock Exchange Thursday under the ticker symbol WORK.

A direct listing is different from an IPO in that only existing shares owned by employees and investors are sold, without the involvement of underwriters.

Shares of Slack shot up more than 50% within moments of beginning trading on the public markets Thursday.

Spotify's direct listing in April 2018 was perceived as a success at the time, although shares have fallen as the company sacrifices profit margins for growth.

But Slack made a decision to remain true to its brand identity and take an unconventional approach, using something called a DPO - a direct public offering.

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Slack's direct listing could have implications for other large technology companies such as Airbnb Inc, which is considering going public through a similar approach, a person familiar with the matter said. Thursday's debut makes Slack one of the most valuable technology companies to reach U.S. markets this year, following in the footsteps of Uber Technologies Inc and Lyft Inc. A direct listing helps companies avoid hefty underwriting fees and a lengthy roadshow process.

"Investors have a love affair with enterprise software companies, and with good reason".

On Wednesday evening, the NYSE set a reference price of $26 per share. Slack's stock price eventually climbed to a high of $42 until it ended the day at $38.62 which means the company is now valued at close to $23bn.

Slack reported an adjusted operating loss of $33.8 million for the quarter, compared with a $20.2 million loss a year earlier. What the future holds for the now public company remains to be seen but one area in which it has excelled is continually adding more paying customers.

"We are in a growth phase right now and we are continuing to invest, but we expect to hit breakeven cash flow soon", CFO Shim said.

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