What Happened to Slack’s Stock?

Not for the first time since it went public, investors are asking themselves: what the hell is going on with Slack’s stock?

Slack (NYSE: WORK) stock closed up 15% for the day, with intraday highs of as much as 21%, before the stock was halted. As trading recommenced, the stock has since dipped around 7% in after-hours. Quite the roller-coaster ride for Slack investors, but what on earth caused it? 

Slack makes IBM its biggest customer

The surge began when Business Insider reported that Slack had “just scored its biggest customer deal ever,” claiming that tech giant IBM (NYSE: IBM) was rolling out the software across the board for its 350,000 employees. The report also claimed that IBM was snubbing Slack’s arch-rival, Microsoft (NASDAQ: MSFT) Teams.

What investors may have missed as they rushed to buy Slack stock was that IBM was already Slack’s biggest customer. Factions in IBM had been using the workplace collaboration tool as far back as 2014 and the use had spread internally to the point it became Slack’s largest benefactor. The current number of users from the OG big tech firm is roughly 300,000, with the new deal scaling the platform to include every employee. 

What happened to Slack’s Share Price?

This is where the fun starts. Let’s do a quick run-down of events:

• Business Insider publishes the article announcing Slack’s biggest customer deal ever.
• Slack soars as high as 21% as investors pour in on the news of 350,000 new users.
• The stock looks set to finish 15% up on the day before it is halted just before market close.
• After-hours, Slack filed an 8-K with the SEC stating “IBM has been Slack’s largest customer for several years and has expanded its usage of Slack over that time.” 
• After the halt was lifted, Slack stock plunged around 7% in after-hours trading. 
• It will look to open this morning up 7% from the previous day after one of its most tumultuous days of trading in its history

Much like showing up to the wrong church on a Sunday, mass confusion abounds.

Slack has seen its software collaboration niche invaded by Microsoft and Facebook (NASDAQ: FB) amongst others and has underperformed since its direct listing last year. The confusion surrounding yesterday’s events notwithstanding, it was actually a very positive day for the company. Speaking on IBM’s “wall-to-wall” implementation, CEO Stewart Butterfield said: “it’s basically the maximum scale that there is, so we now know that Slack will work for literally the largest organizations in the world.” Could it be the catalyst in a resurgent year for the company?

MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in Facebook, Slack and Microsoft. Read our full disclosure policy here.