Slack is going public. It is planning to list its shares directly and let the open market play the crucial role in setting prices.
Slack, or “Searchable Log of All Conversation and Knowledge,” is a popular workplace communication platform that is known all over the world. Though it was going to kill email and still hasn’t managed to do it, it has good chances to show its dominance over this traditional way of online communication on the stock market.
It’s long-awaited IPO is finally under the way.
Slack IPO
According to the information revealed by Slack Technologies, Inc., the company has confidentially submitted a draft registration statement on Form S-1 with the Securities and Exchange Commission. Now the SEC should consider the public sale of the company’s Class A common stock.
Slack preferred to go public through a direct listing instead of raising new capital. In general, it is not a pioneer in this aspect. For example, Spotify has already done it. In April, its existed shares were listed directly on the New York Stock Exchange.
In a direct listing, the traditional underwriting process is omitted. It means that the open market, not a limited group of investors, has a more important role and weight in setting the price.
As a result, this direct listing could be very beneficial for Slack employees. In such a case the staff and longtime shareholders have the right to sell stock on day one, while in the framework of a traditional IPO they should wait till the end of a months-long share lockup period before they get an opportunity to sell their shares.
Such a choice of a way of going public is partially explained by the company’s vision. Stewart Butterfield, Slack CEO and co-founder, says that they always try to use every single opportunity to capitalize on people’s interest in the service starting from investors’ desire to put in their funds to expanding the geography of Slack and reaching new countries.
Among other companies that preferred not to turn to a traditional IPO scheme is Bithumb, one of the biggest cryptocurrency exchanges by trading volume. Having taken a decision to go public in the United States, it has chosen to make it via a reverse merger.
Slack Growth
Being one of the Silicon Valley unicorns, Slack seeking a $10 billion valuation for its IPO.
It’s also worth mentioning that the company has already managed to raise around $1 billion over 8 rounds that in private funding. In the previous year, it earned $221 million and had more than $900 million in cash by the end of the year.
In May 2018, Slack reported that it has 3 million paying customers and its overall client base included 8 million users. The number of its users including international clients continues to grow exponentially. Being launched in 2013, at the moment Slack is considered to be the major office messaging solution.
The new requirements that will entail going public will result in changes in the Slack structure and output. And one of the challenges that the company may face with is the fact that it is blocked in China but it is an extremely important market with tens of thousands of start-ups and more than 1 bln people.
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