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Slack likely to make stock market debut this year through direct listing

After building a strong user base, direct messaging app Slack Technologies has been planning to go public for some time now. A few months ago, the Silicon Valley tech firm had hinted at filing for IPO in 2019 even as it continued to add bigger companies to the client list.

The market got a fresh update on the public listing plans after The Wall Street Journal reported Friday that Slack might go for a direct listing, most probably in the second quarter of 2019. After its inception about five years ago, the workplace collaboration platform achieved multiple growth milestones, all along keeping the market guessing about its future plans.

If the company which was recently valued at $7 billion avoids a conventional IPO and goes for a direct listing, it will become the second big tech firm to do so after Spotify Technology, said the WSJ citing sources close to the matter. After several rounds of funding, Slack’s liquidity position is very comfortable at present.

If Slack goes ahead with its plan for direct listing, it will become the second big tech firm to do so after Spotify Technology

While direct listing will help Slack save the huge amount it would have otherwise paid to underwriters as fees and avoid regulatory restrictions on stock sales by insiders, the company might not garner as much investor interest as Spotify did. It is speculated that more companies would shun the IPO process and take the direct route for public listing in the future, thereby setting a new trend.

Slack’s Wall Street debut comes after the number of daily active users jumped to more than eight million from 15,000 the company had when it started off.  There was a proportionate increase in the number of paid users too, with overseas customers accounting for around 50% of them.

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To its advantage, Slack managed to remain resilient to the stiff competition posed by Microsoft’s Teams, which was launched a couple of years ago by the software giant to cater to the workplace chat and message sharing needs of big corporates. Once it hits the public markets, however, Slack will have to strive hard to sustain the current growth momentum, considering the rapid adoption of Google’s (GOOG) Hangouts and Facebook’s (FB) Workplace.

While the report is yet to be confirmed by the Slack management, it is learned that the listing will be led by investment bank Goldman Sachs Group. With several tech majors already lined up to go public, including Uber and Pinterest, the IPO market is expected to witness record activity this year.

 

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