Slack Is Slacking
Slack’s stock price was down nearly 14% yesterday after it reported steady growth last quarter. Why is their stock price tumbling after a quarter of steady growth? Investors expected huge growth for the business communication platform after many workers were forced to work from home after the coronavirus outbreak. After all, video calling platform Zoom reported 355% growth during the pandemic.
One of the biggest challenges for Slack is competition from bigger companies. Microsoft has been a problem for Slack with its Teams communications app. Slack recently filed a complaint with the European Commission that Microsoft was engaging in anticompetitive behavior. The filing could lead to Microsoft fines, but it is unlikely that Microsoft will be forced to sell Teams.
Another challenge for Slack was their inability to get more out of existing customers. Many businesses were squeezed by the pandemic and could not afford to spend more. Some struggling businesses even gave up using Slack altogether. Slack’s inability to grow in a time where their market grew looks like a bad sign. The company’s ability to keep and grow current customers as the economy recovers will be very important to their future success.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.