Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

Slack Technologies Inc / Equity Capital Markets

Slack Technologies (WORK) offers a cloud-based messaging software which allows employees to communicate and collaborate across organisations. The company is planning on listing its shares on the NYSE on the 20th of June through a direct public offering. While the users of Slack find great advantages in using the application, we are really skeptical about the sustainability of the company’s business model and its ability to grow its top-line. Slack’s revenue growth is slowing down alongside its customer growth and the company is yet to start making profits. Furthermore, we are not convinced with how the management is planning on turning around its business.
Based on our forecasts, we do not expect the company to start making profits over the next 2-3 years. Furthermore, our marginal OP calculation is inconclusive as it has varied from positive to negative over the last 8 quarters making it difficult to understand if Slack’s operational efficiency is improving or not. On the other hand, through Slack’s direct listing, the current investors of the company will be offering shares to the public hence, the company will not be raising any additional capital. Therefore, it is clear that the company is not getting listed for a new influx of cash but to provide its early investors an opportunity to exit. It raises the question whether the early investors want to exit the business as its fundamentals don’t seem very strong.
On the other hand, we expect Slack to face intense competition going forward as it competes with tech giants such as Microsoft and Google. According to Microsoft, it already has a significant user base for its Microsoft Teams platform which we think the users will find it easier to use along with Microsoft software suite.
We believe the investors should avoid buying Slack at its IPO as there are better alternatives such as Zoom if they are looking into adding a high-growth tech unicorn to their portfolio. Thus, we would like to wait for a couple of more quarters to see how the company performs and turnaround its profitability before investing in Slack.

Slack Technologies (WORK) offers a cloud-based messaging software which allows employees to communicate and collaborate across organisations. The company is planning on listing its shares on the NYSE on the 20th of June through a direct public offering. While the users of Slack find great advantages in using the application, we are really skeptical about the sustainability of the company’s business model and its ability to grow its top-line. Slack’s revenue growth is slowing down alongside its customer growth and the company is yet to start making profits. Furthermore, we are not convinced with how the management is planning on turning around its business.
Based on our forecasts, we do not expect the company to start making profits over the next 2-3 years. Furthermore, our marginal OP calculation is inconclusive as it has varied from positive to negative over the last 8 quarters making it difficult to understand if Slack’s operational efficiency is improving or not. On the other hand, through Slack’s direct listing, the current investors of the company will be offering shares to the public hence, the company will not be raising any additional capital. Therefore, it is clear that the company is not getting listed for a new influx of cash but to provide its early investors an opportunity to exit. It raises the question whether the early investors want to exit the business as its fundamentals don’t seem very strong.
On the other hand, we expect Slack to face intense competition going forward as it competes with tech giants such as Microsoft and Google. According to Microsoft, it already has a significant user base for its Microsoft Teams platform which we think the users will find it easier to use along with Microsoft software suite.
We believe the investors should avoid buying Slack at its IPO as there are better alternatives such as Zoom if they are looking into adding a high-growth tech unicorn to their portfolio. Thus, we would like to wait for a couple of more quarters to see how the company performs and turnaround its profitability before investing in Slack.

Slack: Unsustainable Growth and the Route to Profitability Unclear; Slack Is Not Our Choice

United States

Zoom Video Communications, Inc. develops a people-centric cloud service that transforms real-time collaboration experience. The Company offers unified meeting experience, a cloud service that provides a 3-in-1 meeting platform with HD video conferencing, mobility, and web meetings. Zoom Video Communications serves customers worldwide.

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Zoom Video Communications Inc (ZM US)

Slack: Unsustainable Growth and the Route to Profitability Unclear; Slack Is Not Our Choice

Slack Technologies (WORK) offers a cloud-based messaging software which allows employees to communicate and collaborate across organisations. The...

Shifara Samsudeen, ACMA, CGMA

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