Slack Stock Has Plunged 33%. Here’s What Happened.

Topline: Since making its debut on the public market, Slack stock has rapidly lost altitude as investors fret over the company’s slowing revenue, competition with Microsoft and potential shareholder lawsuits.

  • Now trading at just below $26 per share, Slack—which trades under the ticker symbol WORK—has fallen 33% from its original IPO listing price of $38.50.
  • Last Wednesday, Slack issued its first earnings report as a public company, with mixed results: Despite beating expectations on earnings and revenue, shares fell due to weak guidance and concerns over the company’s ability to compete with Microsoft’s rival work chat app in Office 365, Teams. 
  • Slack also forecast larger losses in the third quarter—leading to another sharp drop in shares, as investors remain anxious over the company’s slowing revenue growth and unclear path to profitability.
  • Since last week, several law firms have recently come forward to investigate whether Slack misled investors and failed to adequately disclose finances. 
  • Earlier this morning, a fourth firm announced it was investigating the company for violations of federal security laws, causing the stock to plunge more than 4%.

Key Background: Slack made its debut on the New York Stock Exchange in June through a nontraditional direct listing. But despite much fanfare, the stock price has cratered below its original price and has yet to recover. The company is the latest big tech unicorn to stumble out of the gate, following a trajectory similar to other over-hyped IPOs like Uber, Dropbox, and Lyft.

Further Reading: Analysts are mixed on Slack stock. In a note published last week, Morgan Stanley reiterated their $38 price target, even after Slack missed lofty market expectations for faster billings growth in the second quarter. The pullback creates an even more attractive risk/reward scenario for the stock, according to analyst Keith Weiss. Investment researcher Morningstar, on the other hand, reiterated a “significantly overvalued” rating, putting the stock’s price target at $14. “We still think investors should sit on the sidelines until shares normalize post-direct listing,” analyst Dan Romanoff wrote.

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I am a New York—based reporter for Forbes, covering breaking news—with a focus on financial topics. Previously, I've reported at Money Magazine, The Villager NYC, and T

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