Slack Technologies (WORK) stock nears record low on future concerns

Slack Technologies Inc. (NYSE: WORK) stock has fallen over 43% since its initial public offering on June 20, 2019. The shares have been gearing up to recover from the slump with the three-month decline now at 0.27%. The stock, which has been trading between $19.53 and $42 since the IPO, is now nearing the record low due to future and probe concerns.

Investors were concerned about the US Securities and Exchange Commission investigation of the public listing of Slack and other major companies. The agency has begun the probe that partly focuses on how trading was handled on the first day of the IPO on the New York Stock Exchange, according to a Wall Street Journal report.

The agency started questioning about how the companies achieve valuations of more than $1 billion before going public for over the past several years. The market experts remained puzzled about the investigation as to the target of the probe and the types of misconduct the SEC might suspect.

Meanwhile, the market analysts were cautious about the company’s future due to the decelerating revenue trends. Also, the bottom line could be impacted by an increase in investments arising from maintaining industry-leading uptime and in international expansion, particularly within its direct sales organization.

Slack continues to invest in its user experience, scalability, platform and new features such as shared channels. The company expects research and development expenses to grow roughly in line with revenue growth in the fourth quarter.

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As of October 31, 2019, the company’s principal sources of liquidity were cash, cash equivalents, and restricted cash of $515 million and marketable securities of $297.6 million. Since inception, Slack has financed its operations primarily through proceeds from the issuance of convertible preferred stock and common stock and cash generated from the sale of subscriptions.

In the past, the company has generated significant losses from operations and negative cash flows from operating activities as reflected in its accumulated deficit of $1.1 billion as of October 31, 2019. Slack expects to continue to incur operating losses for the foreseeable future due to the investments that will make in its business and, as a result, it might require additional capital resources to grow business.

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