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Slack Tops $19 Billion Value in Trading Debut
Posted
June 21, 2019
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June 21, 2019
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1:08Now PlayingA parade of initial public offerings from Silicon Valley this year has garnered a mixed reception from investors. Slack Technologies Inc. took a different route on Thursday, and saw its shares soar as it went public without an IPO.
Slack opened at $38.50 on the New York Stock Exchange Thursday, well above the reference price of $26 that was set for the shares in the direct listing. The stock closed at $38.62, giving the company a market value of $19.5 billion.
That’s a huge increase from Slack’s last private funding round in August, which valued the company at $7.1 billion. Thursday’s debut makes Slack the second-most valuable technology company to reach U.S. markets this year, topped only by Uber Technologies Inc. $75 billion value and bypassing Lyft Inc. at $18 billion.
Slack, which makes software for workers to chat and collaborate on projects, directly listed its shares on the New York Stock Exchange, bypassing the usual fundraising process of an IPO and allowing shareholders to sell right away without a lockup period.
A parallel for this unusual type of stock listing is Spotify Technology SA. The music-streaming provider went public using a similar maneuver last year, the last high-profile company to do so. Spotify’s stock is up 13% from its reference price since then.
Goldman Sachs Group Inc., Morgan Stanley and Allen & Co. advised Slack on the listing, the same trio of banks that lined up when Spotify went public.
Slack Chief Executive Officer Stewart Butterfield said Thursday that the company chose not to have a traditional IPO for a pragmatic reason: It didn’t need the cash. “We’re not ideological crusaders on this stuff,” he said. The direct listing process is a more efficient way to price a stock, he said, “but I don’t think anything comes close to not having to dilute existing shareholders by 10%.”
Butterfield said he also wanted to avoid the lockup period. “Especially in a period when you’re locked up, when the supply is so constrained, the psychological impact of that can be a big negative,” he said. “Giving employees the option early is more important.”
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