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Slack (NASDAQ: WORK) saw its stock price sink to the lowest level since its initial public offering (IPO) after its fourth-quarter sales missed analysts expectations, despite the messaging sharing firm seeing rising demand for remote working due to coronavirus outbreak. Shares plunged more than 20% in after market trading on Thursday.
The Slack stock lost almost half of the value from its IPO price of $38 a share last June. However, bulls see the dip as a buying opportunity because they claim Slack’s products are likely to benefit from coronavirus over the coming weeks. Stock broker Baird provided a $31 price target on Slack, which stands at just over $17 in afternoon trading in New York on Friday.
“We don’t have a clear idea of the net impact of the macro-environment on our business, but on the positive front, we are seeing customers begin to work remotely and many are looking to Slack to help manage this,” said chief executive officer Stewart Butterfield (pictured) said. Canadian billionaire Butterfield co-founded picture sharing site Flickr before going on to launch Slack in 2009.
Bulls believe Slack will enjoy more customers during this health emergency due to the rise in remote work.
Slack saw fourth-quarter sales jump 49% from a year ago while its calculated billings rose 37% from the previous quarter to $254.7m. The full-year revenue lifted 57% to $630.4m year-on-year.
Slack said revenue in the quarter ending in April will be $185m to $188m, trailing the $188.4m average analyst estimate, according to a survey by Refinitiv.
The forecast for the full year ranges between $842-862m, in line with the consensus of $854.64m, and up significantly from last year’s total of $630m.
“We’re definitely seeing a surge in interest overall, but that’s primarily in the self-serve area,” said Slack chief financial officer Allan Shim. “So you’re definitely seeing a lot more usage, but in terms of where that’s going to be showing the results, I think that’s going to take some time to play out.”
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