Shares of Slack Technologies Inc., the fast-growing workplace messaging and communications platform, soared nearly 50 percent in their public trading debut on Thursday, valuing the company at more than US$23 billion, Reuters reports.
The strong performance helped validate the unusual direct listing model the company used to go public as well as underscoring investor demand for business software makers.
The stock closed at US$38.62, compared with the New York Stock Exchange’s reference price of US$26 apiece. Trade opened midday at US$38.50.
Slack’s direct listing differs from a traditional initial public offering because it does not raise fresh funds. The method was pioneered last year by music streaming business Spotify Technology SA.
Slack’s trading price gave it a valuation of more than 50 times revenue. That multiple is lower than for other tech companies’ IPOs like Zoom Video Communications Inc., which trades at 88 times revenue, but is very high considering that Slack is not yet profitable, said Kathleen Smith, a principal and manager of IPO ETFs at Renaissance Capital.
“They are going to have to do an awful lot to get the company’s fundamentals to justify that kind of valuation,” she said.
Slack is a business-focused messaging and communications platform, similar to group chatrooms, with the ability to collaborate on documents and order conversations by groups and themes.
Slack’s listing opened with about 40 million shares trading to outside investors, providing better-than-expected liquidity for the stock, a person familiar with the matter said.
The debut follows a spate of high-profile technology IPOs, some of which, including Uber Technologies Inc. and Lyft Inc., had disappointing starts to trading.
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