Summits Yellow

Slack makes a successful stock market debut using a direct listing

Alyssa Clementi

Popular workplace communication platform Slack has begun trading on the New York Stock Exchange as of this morning, but the tech unicorn did not go public in the form of a traditional IPO. Instead, Slack followed in Spotify’s footsteps, which went public last year, and used a direct listing to begin trading shares. By using this method, Slack avoided the cost of hiring advisors and underwriters, and were able to remain more in-control of the suggested stock price.

"There was definitely quite a lot of debate for awhile because it isn't the traditional route," said Cal Henderson, Slack's cofounder and CTO, in an interview. "But we didn't have a need to raise capital. That was the biggest driver."

Before Slack went public, the NYSE set a reference price of $26 a share, which was quickly bumped up to $38.50 a share when the stock market opened today. Since this morning, shares have jumped by 60 per cent, and stocks are now trading at $42 each. Although it is hard to say if the stock price will keep trending upwards, Slack is currently valued at around $23bn.

Since the beginning of the year, multiple tech companies have gone public using IPO’s and seen extremely disappointing results, such as Lyft, followed by Uber. If Slack keeps having a successful stock market debut after using a direct listing, this method may become more and more popular with other companies that plan to begin trading this year.