Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Nyse  >  Spotify Technology S.A.    SPOT   LU1778762911

SPOTIFY TECHNOLOGY S.A.

(SPOT)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsPress ReleasesOfficial PublicationsSector newsMarketScreener StrategiesAnalyst Recommendations

Slack stock surges at debut, values company at more than $23 billion

share with twitter share with LinkedIn share with facebook
share via e-mail
0
06/20/2019 | 06:20pm EST
Slack Technologies Inc. co-founders Butterfied and Henderson outside the New York Stock Exchange (NYSE) during the company's direct listing in New York

NEW YORK (Reuters) - Shares of Slack Technologies Inc, the fast-growing workplace messaging and communication platform, soared nearly 50% in their public trading debut on Thursday, valuing the company at more than $23 billion.

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 $38.62, compared with the New York Stock Exchange's reference price of $26 apiece.

Trade opened midday at $38.50.

Slack's direct listing differs from a traditional IPO 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.

The Slack tool began as an internal project to improve communications at video game company Tiny Speck, which eventually became Slack Technologies and focused on developing the communications software.

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.

The direct listing model offers Slack an opportunity to save significantly on investment banking fees and avoid restrictions on insider stock sales.

"We think a direct listing is a more effective and efficient way to get to a normalized level of supply and demand without the constraints of an IPO,” said Allen Shim, Slack's chief financial officer.

Slack's direct listing could have implications for other large technology companies such as Airbnb Inc, which is considering going public through a similar approach, one person familiar with the matter said.

The strong open built on a string of successful IPOs for enterprise software companies, said Alejandro Ortiz, a principal analyst at SharesPost.

"Investors have a love affair with enterprise software companies, and with good reason. They continue to perform very well," he said.

Recent enterprise software IPOs include Crowdstrike Holdings Inc and Zoom. Enterprise software IPOs over the past 12 months are trading, on average, at more than 100% above their IPO price, Ortiz said.

Spotify's direct listing in April 2018 was perceived as a success at the time, although shares have fallen as the company sacrifices profit margins for growth.

"Direct listings are still a pretty new vehicle," Fiverr International Ltd Chief Executive Officer Micha Kaufman said in an interview last week after the Israel-based company, which offers an online marketplace for freelance services, went public.

"But it's definitely more appropriate for companies that have raised larger sums for longer periods of time in the private market, and are really wanting to give their investors an upside or an exit."

Revenues for San Francisco-based Slack soared more than 80% to $400 million in 2018, but it reported losses from operations of $143.85 million. It has more than 90 million users but so far has only around 100,000 paid customers.

"We are in a growth phase right now and we are continuing to invest, but we expect to hit breakeven cash flow soon," 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)

By Carl O'Donnell and Joshua Franklin

Stocks mentioned in the article
ChangeLast1st jan.
RENAISSANCE,INCORPORATED -0.99% 1701 End-of-day quote.-2.80%
SLACK TECHNOLOGIES, INC. 4.89% 21 Delayed Quote.-10.77%
SPOTIFY TECHNOLOGY S.A. 0.10% 144.55 Delayed Quote.-3.48%
UBER TECHNOLOGIES, INC. 2.14% 37.08 Delayed Quote.22.06%
ZOOM VIDEO COMMUNICATIONS, INC. 1.81% 71.63 Delayed Quote.3.53%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on SPOTIFY TECHNOLOGY S.A.
01/22Amazon Music crosses 55 million subscribers globally, trails Apple Music
RE
01/22SPOTIFY TECHNOLOGY S A : Amended Statement of Ownership
PU
01/17SPOTIFY TECHNOLOGY S A : in Early Talks to Buy Sports and Pop-Culture Outlet the..
DJ
01/16SPOTIFY TECHNOLOGY S A : Welcoming Paul Vogel, Spotify's New Chief Financial Off..
PU
01/14U.S. SEC commissioner backs direct listings to rein in Wall Street fees
RE
01/09Spotify Aims to Track Podcast Ads -- WSJ
DJ
01/08SPOTIFY TECHNOLOGY S A : Report of Foreign Issuer
PU
01/08Communication Services Shares Rise as Another Platform Revamps Content Guidel..
DJ
01/08SPOTIFY TECHNOLOGY S.A. : to Announce Financial Results for Fourth Quarter 2019
BU
01/08Spotify Rolls Out Technology Aimed at Helping Podcast Advertisers
DJ
More news
Financials (EUR)
Sales 2019 6 800 M
EBIT 2019 -35,1 M
Net income 2019 -10,1 M
Finance 2019 1 448 M
Yield 2019 -
P/E ratio 2019 -440x
P/E ratio 2020 -2 593x
EV / Sales2019 3,33x
EV / Sales2020 2,63x
Capitalization 24 066 M
Chart SPOTIFY TECHNOLOGY S.A.
Duration : Period :
Spotify Technology S.A. Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends SPOTIFY TECHNOLOGY S.A.
Short TermMid-TermLong Term
TrendsBearishBullishBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 32
Average target price 151,24  €
Last Close Price 130,99  €
Spread / Highest target 58,0%
Spread / Average Target 15,5%
Spread / Lowest Target -30,9%
EPS Revisions
Managers
NameTitle
Daniel Ek Chairman & Chief Executive Officer
Paul Vogel Chief Financial Officer
Stig Gustav Victor Söderström Chief Research & Development Officer
Martin Lorentzon Independent Director
Cristina Stenbeck Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
SPOTIFY TECHNOLOGY S.A.-3.48%26 518
TENCENT HOLDINGS LIMITED2.66%471 127
NETFLIX5.97%150 268
NASPERS LIMITED3.06%71 161
UBER TECHNOLOGIES, INC.22.06%61 921
COSTAR GROUP, INC.8.75%23 904