Slack Pushing Forward with IPO as Early as Q1 2019

Justin Ohl

This is not investment advice. The author has no position in any of the stocks mentioned. has a disclosure and ethics policy.

According to the Wall Street Journal, Slack Technologies Inc. is seeking to go public as soon as the first quarter of 2019 sources familiar with the matter have stated. At an estimated current valuation of around $7 billion on the basis of a funding round last year, this would make it one of the largest tech IPOs since Snap Inc's (NYSE:SNAP) debut on the street in 2017, where it hit $24 billion. This puts Slack up quite a bit north of where it was last year when SoftBank pegged it at $5.1 billion after a fresh round of funding.

Fundamentals Not Slacking

Slack makes a business chat and collaboration tool as a competitor to Microsoft with its Teams offering. With over eight million active daily users (three million of those paying for the privilege) it obviously has a solid product, whether its the flavour of the month due to its association with trendy startups or actually has the legs to go up against a major technology provider long term is an open question but now would probably be the time to capitalise on its momentum to raise money.

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This rumor of impending IPO comes not too long after it just raised $427 million in private funding in a round led by Dragoneer Investment Group and General Atlantic earlier this year. Slack has apparently been quietly working on going public since at least 2017, but short of hiring underwriters for their IPO, those close to the matter internally believe that the company has completed every step necessary other than that, and even plan on talking to underwriters soon.

With Slack working towards going public, Chief Executive Stewart Butterfield came out and said it was in the process of filing for an IPO, but it was a multi-year process and the firm had already ruled out 2018 as the year they were going to go public. Either they thought it too much of a rush or perhaps too much of a risk at the time, but now are eyeing Q1 of 2019. This may remind some of our readers of the SurveyMonkey (NASDAQ:SVMK) IPO that just happened this week, but we don't have those sort of the nitty-gritty details of this IPO yet, such as classes of stock offered, how much stock, what the value will be at open and so on.

Not everything is completely rosy though, as Slack still has competition from Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) from Chime and Teams respectively. Both products offer different services and market to different needs of organizations, but Slack is still a popular choice for these organizations. If they are going up against harsher competition from the likes of those two juggernauts, there could very well be possible threats to the livelihood of Slack down the road that haven't made themselves apparent yet.

Beyond Interesting, Keep an Eye Out

Since we're just about to jump into October and Fall has just started, Slack's IPO is a fair distance away, thus giving all parties involved (and those not involved yet or about to be involved) time to organize and prepare. The demand for their product is only rising, but even if it were to be hypothetically lukewarm, the demand for tech stocks is absurd currently, making what could have been a very boring IPO into one of great interest. While some may be cynical, there are reasons to pay attention to Slack in the coming months.

It seems they are trying to tighten up everything internally in order to launch this IPO swimmingly, so it could very well be a sign they are ready for the primetime. Seeing as how in just a year their value went from $5.1 billion to $7 billion, a 37% increase. The accelerated timeline of their IPO only adds fuel to this fire, as they definitely want to try to ride the wave the market's been on for the last while, and they need to try to take advantage of that to maximize their value.  Playing Devil's Advocate, this could be seen as a "now-or-never" moment as well, where the timeline is essential to the valuation more than the product or services the company offers, which would be fundamentally worrisome. Take everything with a grain of salt this far out.

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