How to Buy Slack Stock

NOTICE: Slack Technologies was acquired by Salesforce (CRM) on July 21st, 2021. To learn more about slack and salesforce stock head over to How to Buy CRM Stock.

Slack Technologies stock was made available through a direct public offering (DPO) on the New York Stock Exchange (NYSE) on June 20 under the symbol “WORK.” Unlike an initial public offering (IPO), which is how the vast majority of companies that go public with their shares raise capital, the Slack DPO made the stock available directly to the public on the first day of trading by selling existing shares held by registered shareholders without issuing any new shares. As of June 21, Slack Technologies was acquired by Salesforce Inc. for $27.7 billion. The ticker "WORK" is no longer available on any exchange; after being acquired by salesforce, Slack will now be under their ticker "CRM."

Main Takeaways: How to Buy Slack (NYSE: CSM) Stock

• Pick a broker. We recommend Webull, E*TRADE and Interactive Brokers.
• Practice trading before you buy. Let yourself get comfortable with the software so you can trade with confidence.
• Fund your account. You can usually fund online brokerage accounts via a bank transfer or with your debit card.
• Place an order for CSM. You're now an early owner of Salesforce stock (the company that owns Slack)!

Slack: Company and Stock History

Slack was originally used as a tool in the development of an online game called Glitch. According to the company, “Slack” means a “Searchable Log of All Conversation and Knowledge.” 

Slack is a cloud-based collection of groupware (also known as collaboration software) and other online services. Slack’s groupware is designed as a collaboration hub to assist people involved in a common job or project to attain their goals. The company who own owns Slack, Salesforce.com is an American software as a service (SaaS) provider best known for offering a complete suite of customer management and enterprise application tools. To find outmore about Salesforce please visit Salesforce.com stock history.

Slack has seen enormous growth in its user base since its online release in August 2013.  The company currently has 10 million users in 150 countries, including 600,000 organizations, 500,000 developers and 95,000 paying customers who actively use Slack on a daily basis. Slack users generate over one billion messages on the platform every week. 

The Slack website and interface can be used immediately to connect to other Slack users directly or in specific work groups, and the basic service is free. Anyone who has used Slack can attest to its ease of use and the efficiency it provides when communicating with other people via text or voice.  

Future Outlook for Slack

Slack has ambitious plans for the future, despite the fact that the company is still losing money. The firm’s growth in sales to corporate clients has quadrupled since 2016, rising from 25% of total revenue to its current level of 43%. Revenues have also increased by double digits for the last 3 years. 

Slack reported a Generally Accepted Accounting Principles (GAAP) first-quarter net loss of -$31.8 million, or -$0.26 per share. On a non-GAAP basis, Slack reported a smaller net loss of -$0.23 per share. 

Furthermore, revenue for the quarter came in at $134.8 million and rose by +67% year on year. Billings came to a total of $149.6 million, showing an increase of +47% year on year. 

Slack also reported that its net loss for the fiscal year ended on January 31 was -$140.7 million, higher than the loss of -$108.9 million seen the previous year. Slack still reported annual revenue of $400.6 million, which was almost double the amount from the previous year. 

Slack’s revenue guidance for its second quarter of $139-$141 million would show an increase of 51%-53% year on year, if actualized. For the full fiscal year 2020, Slack expects revenue of $590 to $600 million and a non-GAAP loss of -$0.44 to -$0.41 per share with an operating loss of $192 to $182 million. 

According to the company’s S-1 filing with the Securities and Exchange Commission (SEC), Slack’s registered shareholders will resell 118,429,640 shares of the company’s existing Class A common stock that they currently hold. 

Slack reported that 181 million shares of its Class A stock, with the omission of restricted stock, were held by officers and employees, while 324 million Class B shares were held by registered stockholders. 

In the chart below, you can see Slack’s annual recurring revenue (ARR) of each cohort (groups of people) over five different annual time periods. Each cohort represents paid customers who made their first purchase from Slack in the given fiscal year. 

Why You Might Want to Buy It

Slack’s Messaging App: Slack’s messaging app continues to gain ground and has replaced email as the best way to communicate for many companies. Slack could be the new standard messaging platform worldwide, which could significantly improve revenues and earnings depending on how the company leverages its position. 

Enterprise Work Platform: In addition to its potential for becoming the world’s standard messaging platform, Slack could also become the global standard for collaborative and work-related groupware. The company already has a substantial lead in the field, which could be taken to the next level, as the company’s notable growth in sales to corporate clients is already evident. 

No Minimum Holding Period: Unlike an IPO, in which initial participants typically have a lock-out period of at least 30 days during which they cannot sell their newly issued stock, in a DPO, buyers can sell their shares right after they buy them. 

Considerations Before You Buy

Increased Competition: A slew of companies offering essentially the same services have recently begun eating away at Slack’s market share. Options such as Alphabet’s Google Hangouts, Facebook’s Workplace, Telegram, Microsoft Teams, Quip, Monday and Chatter are just a few of these competitors. 

Slowing Revenue Growth: Slack’s revenues have steadily declined over the past 3 years as more companies have begun crowding the market. This could adversely affect Slack’s stock price going forward once it’s publicly traded. 

Reduced Shareholder Rights: Slack’s DPO just involves the company’s Class A shares, which have only one vote per share. This effectively puts the control of the company in the hands of the holders of its Class B stock, which has 10 votes per share. The good news is that 10 years after the company’s S-1 filing, its Class B stock’s voting rights will revert to only one vote per share. 

Acquired by Salesforce.com: It's important to note that cloud computing giant Salesforce successfully completed an acquisition of Slack for $27.7 Billion.

How You Can Buy Slack Stock Right Now

Because Slack was acquired by Salesforce, in order to own stock in Slack you must do it through owning Salesforce (CSM).

Pick a Broker

Before you can buy Slack stock, you must have an account with a reputable stockbroker. Knowing your needs before you choose a broker will make your decision much easier.

How you buy Slack stock is just as important as where you trade, so make sure you pick the right broker, whether it’s Webull (for beginners) or Interactive Brokers (for more experienced traders).

Practice Trading

If your objective in buying Slack stock is for investment purposes and nothing more, then all you have to know to place an order is the price you’d like to pay and the amount of stock you want to acquire at that price. If you’re unsure of the price, place a market order instead.

On the other hand, if you want to watch the market to get familiar with how Slack stock trades, especially since the stock has never traded publicly on an exchange, consider opening a virtual or demo account with at least one of the brokers you’re considering. 

A virtual trading account works just like a live account except that you don’t have to risk any funds when you trade. Ideally, you can open several accounts with different brokers to evaluate their platforms and services. Regardless of whether you buy Slack or any other stock, using a demo account to practice in before you begin live trading can generally benefit you. 

Fund Your Account

Once you’ve practiced trading in a demo account and have built enough confidence in your trading strategy and ability to operate the platform, you can fund an account with the broker you’ve chosen. You can pick a different broker than the one where you opened a demo account, though you might be better off just funding your account with the same broker if its services seem to meet your needs. 

Buy Salesforce Stock

Funded an account with a reputable broker? You can now place a market order at the opening. This will let you obtain the stock at its opening price, which could be quite high. You could instead watch the price action at the stock’s opening and place a limit order bid at a lower price after the initial flurry of activity has passed. 

You may want to place a good ‘til canceled or GTC order at a low price and wait to see if the order is filled if you’re planning on buying Slack stock for investment purposes. Once executed, you could protect your position by placing a stop-loss order or place trailing stop orders if the stock starts rallying. 

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Should You Buy Slack Stock?

The results of a DPO versus an IPO have significantly different impacts on both the company and its prospective investors. For starters, a DPO eliminates the middlemen, or the investment bankers that normally sell newly-issued shares to the investing public after first purchasing the shares from the company. 

A stock issue underwritten like that generally costs the company issuing shares as much as $100 million in underwriting fees, which are typically paid for with the company’s newly issued stock and dilute its value. In contrast, Slack’s DPO does not involve raising capital through a new issue of stock but instead, reselling some Class A stock already owned by the company’s registered shareholders. 

You’re probably best off waiting until the initial excitement has passed and market volatility cools off before putting in a bid. This is because most new tech stocks tend to gap higher when they first trade but can later stage a pullback. 

The stock’s initial performance could also give a strong indication of whether WORK stock would make a good long-term investment or a decent stock to trade using short term strategies. 

Want to learn more about trading stocks? Check out Benzinga's guides to the best online brokerages for beginners, how to trade stocks for free and the best online day trading courses.

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