Slack Technologies, Inc. (NYSE:WORK) – $5 Target

Slack was up 10.3% Tuesday, to $23.13, after an analyst made a bullish call.

That is the single biggest move in the stock since its IPO last summer. Analyst’s average consensus is $27.32 which is still $4.01 above today’s price..

We call the BS

Slack shares have fallen 40% since being listed – why?

When the reality of Wall Street hit the cushioned and overhyped Silicon Valley valuations – real pricing kicked in.

Same happened to WeWork and their IPO – that never was.

According to Morningstar, $WORK has a short interest of 44.85M out of the 194.09M free float – representing 23.11%.

“Slack has become something of a default term that embraces reactions such as annoyance, irritation and peculiar skin rashes. My impression is that many employees — and I have had the desperate privilege of using Slack myself — find it an all-enveloping time-sink that can sometimes be as productive as shaving your eyebrows with a lawnmower.” – a quote by Chris Matyszczyk with which we agree.

5 reasons here for serious concern:

  1. Its revenue growth is slowing down
  2. It’s hugely unprofitable
  3. It’s burning through cash at a rapid rate
  4. Its corporate governance is not shareholder friendly
  5. Paid for conversions rates are dropping at an alarming rate

It seems Slack creates more work for you – than helping you do more work.

A great short, we see the stock at $5 in 2020. ??

 

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Luka Marjanovic

Partner

Luka holds a Bachelor’s in International Business and a Master’s in International Management. During his undergraduate studies he worked as a research assistant in the field of Big Data; founded his own consulting firm providing services to local SME's in various sectors and invested in the capital markets; as well as working pro-bono providing education and career counselling. Prior to his business education, he studied Biology-and-Biotechnology, and served in the Danish Royal Army as Second Sergeant, leading and managing a group under extreme conditions and pressure. Luka has spent significant time abroad, living and working in seven different countries. When he's not in the office, he's chasing the next gusts windsurfing, carving the mountain snowboarding or out in the forest for a jog.