Private Investors Celebrate Slack’s Direct Listing Success
June 20, 2019 | Blog

Private Investors Celebrate Slack’s Direct Listing Success

Slack, the popular workplace collaboration and communication tool, debuted in public markets in a big way. Coming via an unconventional direct listing, the company’s share price closed 49 percent above the $26 reference price and 225 percent above its last private funding round ten months ago. Whether this performance is more attributable to the S&P reaching record highs, the appetite investors have shown for enterprise SaaS companies, or just the popular product that is Slack, one thing remains – Slack is now worth over $23 billion.

This event is important for two big reasons. First, direct listings reward employees and private market participants (both private investors and secondary market buyers) with something traditional IPOs don’t – no lockup period. Typically, shareholders are forced to wait for six months before they can sell their shares, the obvious risk being a decrease in share price at that time, either because of something company-specific or broader market movements. Slack shareholders had no such risk. That said, holders of the company’s may not choose to sell, but the option to do so could be highly valuable – something evident in the chart below. Based on the various prices paid for Slack shares over the years, selling today may have resulted in realizing significant gains.

The second reason worth noting is what Slack’s performance today could mean for other unicorns considering a direct listing, including home-sharing giant Airbnb. While we’re still in the early stages, the limited volatility and general success seen today makes a strong case for the viability of direct listings. It’s important to remember that this type of public offering wouldn’t work for every company, but for those with the requisite characteristics, Slack and Spotify have shown it is certainly something to consider.

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Securities referenced in this article may be offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice.

Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.

SharesPost, the SharesPost logo, My SharesPost, the SharesPost Index, and SharesPost Investment Management are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.

Copyright SharesPost, Inc. 2020. All rights reserved.

PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES

This article does not constitute an offer to provide investment advice or service. Registered representatives of SharesPost Financial Corporation do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services.

Securities referenced in this article may be offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice.

Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.

SharesPost, the SharesPost logo, My SharesPost, the SharesPost Index, and SharesPost Investment Management are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.

Copyright SharesPost, Inc. 2020. All rights reserved.