![]() ![]() As we know, the common enterprise didn't quite move on from emails and phone calls for some time. Text-based chat has become the dominant form of social communication while video-based chat is replacing traditional phone calls. Now, we have sticky chat across both desktop and mobile phones (mostly mobile), with the ability to create groups, share files/images/videos, and search conversations. Source: Slack Media Kit, Desktop Screenshotĭoes anyone remember a time you used to email relatives or friends? Sending emails socially was once fairly popular, then it evolved into chat rooms where both parties or multiple parties could engage in text-based chat. If you have the time, here is a detailed overview video of the product and business by the company: Anyone who has asked someone to explain what Slack has probably received an unsatisfactory answer that led them to say something along the lines of "I don't get it". This definition, unfortunately, is an understatement. Slack offers chat-centric team collaboration software that is used as a baseline platform for effective communication across any team or organization. At the current multiples, WORK is undervalued. Yes, they don't have a greenfield addressable market, but they've got a long growth runway ahead and are executing well. In this article, I argue that the market is large enough for multiple players, and if investors were to dig deeper into how Slack works, they'd find a durable competitive moat. ![]() Competition from Microsoft Teams ( MSFT) is overstated in my view, and it seems like the market still doesn't quite understand what Slack does that adds value to its users. After scouring through SaaS for something that might resemble a reasonable valuation, this is one of the better opportunities. Salesforce had notably been in talks to acquire Twitter in 2016, a deal which Benioff ultimately walked away from because investors reportedly balked at the idea and the potential complications involved with owning the social media company.Slack ( NYSE: WORK) is a "Buy" in my opinion. ![]() Salesforce previously acquired Tableau Software in 2019 for over $15 billion, and cloud-software provider Vlocity Inc. And Slack has been struggling to capture market share from Microsoft, though the work-from-home trend during the pandemic has sent Slack downloads much higher than in recent years. ![]() Slack's stock price soared over 30% in Wednesday morning trading after the Journal broke the story, and it's now at $40.70 - up from $29.55 at the morning bell.Īt potentially around $20 billion, this deal would be Salesforce's biggest acquisition to date, as the SF Business Times notes.Ĭalling the potential deal an "aggressive move" for Salesforce and CEO Marc Benioff to expand the company's offerings, Wedbush Securities analyst Dan Ives tells the Business Times, "This deal would be a major shot across the bow at Microsoft with the company's Teams offering a direct messaging competitor against Slack that has been a clear hurdle to growth and now would be a two-horse race between Microsoft and Salesforce."Īs the Journal notes, Slack's stock price has not dramatically changed since its initial direct listing price of $26 in June 2019, opening the door for an acquisition like this one. Salesforce is likely to pay somewhere north of that to buy the company, positioning Salesforce to rival Microsoft as an all-purpose software provider - with the acquisition of the biggest rival to Microsoft's Teams software. Slack Technologies, which launched a decade ago as a gaming company called Tiny Speck and soon pivoted to focus on its channel-based chat software, had a market valuation of just under $17 billion on Tuesday, as the Wall Street Journal reports. San Francisco-based Salesforce is reportedly in advanced negotiations to acquire workplace messaging app Slack, in the latest of a flurry of year-end mergers and acquisitions. ![]()
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