NEW YORK (Reuters) – Shares of Soft Technologies, Inc., the fast-growing workplace, the messaging and communications platform, has increased to nearly 50 percent in their public trading debut on Thursday, valuing the company at more than $23 billion.
The company’s strong performance has helped to validate the diversity of the direct listing, the company to go public, as well as to the promotion of investor demand for the business and the software developers. The stock closed at $38.62, in comparison with that of the New York Stock Exchange, the reference price of $26 per unit.
Market opened in the afternoon at $38.50.
Slack, direct entry is different from a traditional IPO because it did not raise fresh funds. The method has been developed in the last years, the music streaming company, Spotify Technologies SA.
Slack’s trading, the price gave it a valuation of more than 50 times the revenue. That multiple is lower than at other tech companies’ Ipos, such as the Zoom Video Communications, Inc., which trades at 88 times the revenue, but it is very high in view of the fact that it is Limp, it is not cost-effective, said Kathleen Smith, a principal and manager of the IPO etfs Renaissance Capital.
“They’re going to be doing a lot of the business fundamentals and to be able to justify that kind of valuation,” she said.
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Slack is a company that is focused on messaging and communication platform, similar to a group chat, the ability to collaborate on documents and discussions from your groups and topics.
The Slack-tool started as an internal project to improve the communication at a video game company, Tiny Speck, which, ultimately, was a Soft-Technologies, and is focused on the development of a communication software installed on it.
Slack’s is open, with around 40 million shares are trading for outside investors, the offer of a better-than-expected liquidity of the shares, a person familiar with the matter said.
The debut comes after a string of high-profile technology Ipos, some of which, such as Uber Technologies Inc and Lyft Inc. have had a disappointing start to the trading.
The direct entry model, provides the Oil an opportunity to save a considerable amount of investment banking fees, and avoidance of any restrictions on sale.
“We think that it is a direct list, it is a more effective and efficient manner, in order to arrive at a normalized level of supply and demand, without the constraints of an IPO of the company,” said Allen, Shim, Slack’s chief executive officer (ceo).
Slack Technologies, Inc. co-founder and Chief Executive Officer (CEO), Stewart Butterfield (R), and the company’s Chief Technology Officer (CTE), Cal Handerson form, along the outside of the New York Stock Exchange (NYSE) while the company is directly quoted in the New York, New York, USA, 20 June, 2019 at the latest. REUTERS/Brendan McDermid
Slack direct quotation may have an impact on other big tech companies such as Airbnb Inc., which has been considered by the general public, by means of a similar process, a person familiar with the matter said.
The strong, open and built on a series of successful Initial public offerings in enterprise software, the companies said Alejandro Ortiz, principal analyst at SharesPost.
“Investors are having a love affair with enterprise software companies, and for good reason. They will continue to do very well,” he said.
With recent enterprise software Ipos have been Crowdstrike Holdings, Inc. and Zoom in and out. Enterprise software Ipos in the last 12 months, the market will, on average, more than 100% above the IPO price, Ortiz said.
Spotify’s immediate entry in the April of 2018, it was seen as a success at the time, though, the shares fell as the company sacrifices profit margin for growth.
“Direct deals are still a relatively new car,” Fiverr International Ltd., Chief Executive Officer and Micha Kaufman said in an interview last week after the Israel-based company that offers an online marketplace for freelance services went with the crowd.
“But it’s definitely more appropriate for companies with a increased a larger amount for a longer period of time in the private sector, and its willingness to provide its investors with a value-added, or output.”
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Revenue for the San Francisco-based Slack has increased by more than 80% up to $400 million in 2018, however, the reported loss from continuing operations of $143.85 million. It has over 90 million users, but has, so far, only 100,000 paying customers.
“We are in a growth phase right now and we will continue to invest, but we expect to hit break-even cash flow, quickly,” CFO, Shim said.
Reporting by Joshua Franklin and Carl O’donnell in New York; additional reporting by Aparajita Saxena in Bengaluru; Editing by Peter Henderson, Cynthia Osterman, Jeffrey Benkoe and Tom Brown