How to Buy Slack Stock: Face-to-face meetings were the cornerstone of business in the 20th century, but today, they are all but obsolete.
Technology has created unlimited opportunities for virtual collaboration, which means workers can get the job done anytime, anywhere. This is good news for employee engagement and productivity, and it has significant benefits for businesses. Greater efficiency and reduced travel trims expenses, and increased productivity adds to bottom-line profits.
Some of the collaboration technologies are basic, like email and internal websites. However, the most exciting technological developments are far more advanced. Video conferencing services have worked out the bugs, and most users now enjoy clear, reliable connections. Most platforms offer options to see multiple participants at once, so everyone in the virtual “room” can participate in the conversation.
That’s just the beginning when it comes to advanced collaboration software. Companies like Slack continue to transform the experience of virtual work with comprehensive platforms that bring sophisticated features to organizations of all sizes.
Slack Is No Slouch
Slack Technologies is rapidly gaining popularity as a must-have collaboration tool for company’s with remote workers, and there are plenty of businesses that find it valuable even when all employees are on-site.
This platform offers an extensive menu of features used by virtual teams to manage projects, exchange documents, and communicate with internal and external contacts.
Instead of trading paper documents or emailing electronic versions around, Slack users stay organized by creating individual channels for each topic of discussion.
Better still, everything said or shared in the platform can be located through a simple search. That means no time lost reviewing conversation histories line by line for forgotten details or lost records.
Slack held its IPO in June 2019 and was immediately a hit with investors. Share prices rose fairly quickly. However, since August 2019, those prices have gradually drifted down.
Today, investors who missed out on the initial launch are considering buying stock at the discounted rate. They are confident that Slack has plenty of room to grow, and over time, it will deliver significant value for shareholders. Are they right?
Is Slack Stock a Buy?
Slack announced its third quarter fiscal year 2020 results in December 2019, and the news was nearly all good.
During the period, the company launched a popular new feature it calls “shared channels”, which allows users from different organizations to collaborate with one another.
This option sets Slack apart from most competitors who limit connections to users within the same company. By the end of the quarter nearly 25 percent of paid customers began leveraging shared channels to streamline workflow.
Other third quarter highlights include a 30 percent year-over-year increase in paid customers – 105,000 total.
Paid customers with more than $100,000 in annual recurring revenue increased 67 percent year-over-year to 821, and paid customers with more than $1 million in annual recurring revenue exceeded 50, marking achievement of a longtime business goal.
Perhaps more importantly, the net dollar retention rate totaled 134 percent, proving that once companies start using Slack, they see the value that this platform offers.
From a financial perspective, third quarter figures showed impressive growth. Revenue totaled $168.7 million, a 60 percent year-over-year increase, and GAAP gross profit was $145.6 million – a significant gain over the $92.1 million profit during the same period in the previous year.
The downside is that Slack did see an operating loss of $95 million, which is 56 percent of total revenue. That compares unfavorably to the previous year’s loss of $50.8 million or 48 percent of total revenue, which translates to a GAAP loss of $0.16 per basic and diluted share.
The primary reason for the operating loss is that Slack invests a massive amount in product development. Many investors consider that a solid tradeoff for missing out on short-term profits.
Assuming Slack cements its leadership position and captures significant market share, that investment is likely to pay off in the form of increased value for shareholders.
What To Know Before Buying Slack
Slack plans to announce its fourth quarter and year-end results on March 12, 2020. Investors, potential investors, and analysts are anxiously awaiting these figures to get a better sense of Slack’s short-term and long-term potential.
During the third quarter earnings call, business leaders offered some fourth quarter and full-year predictions, as follows:
- Fourth quarter revenue is expected to come in between $172 million and $174 million, which would mark year-over-year growth of 41 percent to 43 percent
- The company expects a Non-GAAP operating loss between $34 million and $36 million, or between $0.06 and $0.07 per share
- For the full-year, total revenue is projected to be between $621 million and $623 million, which would be a year-over-year increase of 55 percent to 56 percent
- A Non-GAAP operating loss of between $142 million and $144 million, which breaks down to between $0.31 and $0.32 per share
It’s important to note that there was a bit of drama with Slack at the beginning of February. Management hinted at big news, driving share prices up by about 15 percent.
It appears that the “big news” was an announcement that IBM was deepening its relationship with Slack, however some misunderstood and thought that the company was announcing a brand-new client.
Once the facts were sorted out, share prices dropped back down a bit. Nonetheless, this news does point to a promising future for Slack – a point that got lost in the confusion.
Open a Brokerage Account
If you are ready to buy Slack stock, you can open a brokerage account right online. A variety of reputable companies offer low-fee or no-fee trading for self-directed investors, and they have no minimum balance requirement.
For Slack stock traders who also want to goose returns with some options income by selling covered calls, or those who simply want to buy and hold Slack, tastyworks is a world class brokerage firm with excellent rates (hint $0 commissions on stock trades *clearing fees still apply).
Place a Buy Slack Stock Order
Once your brokerage account is ready to go, you can fund it with an electronic transfer. It may take a few days before the funds are cleared for use. Then, simply place your order.
You can choose between a market order that buys the shares as soon as administratively possible, regardless of price. Depending on how quickly the trade goes through, your final cost might be a bit higher or lower than when you placed the order.
If you don’t want to risk a sudden change in the pricing, a limit order is a good alternative. You specify the price you are willing to pay for your shares, and if share prices exceed that amount, no trade will be made.
Slack is a popular tool with companies of all sizes, and by all indications, it has room to grow. Of course, all investments carry risks. If you expect Slack’s rewards to outweigh the risks, you can open an online brokerage account in just a few minutes.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.