Slack to Bypass Traditional IPO for Direct Listing in 2nd Quarter (Report)

Popular workplace messaging app could become second-biggest tech direct listing ever

Slack Technologies is preparing to bypass the typical initial public offering and instead opt for a direct listing when it makes its Wall Street debut later this year, according to a Friday report by The Wall Street Journal.

The rare move would likely make the popular workplace messaging platform, valued at $7.1 billion, the second-biggest direct listing ever from a tech firm. Spotify, which chose a direct listing for its own debut on the New York Stock Exchange last year, ended its first day valued at $26.6 billion.

A Slack representative did not immediately respond to TheWrap’s request for comment.

Slack would directly list its shares during the second quarter of 2019, according to the Journal, which did not indicate which exchange Slack plans to use.

The company, which offers free and paid communications services, has 8 million daily active users, including 3 million paying customers. It teases partnerships with several companies on its website, including Salesforce, Dropbox and the Los Angeles Times.

A direct listing allows a company to skip the major underwriting fees that go along with an IPO. It also adds a layer of intrigue since Slack shareholders would be able to trade their shares immediately, without a lockup period that usually bars investors from offloading their shares before a certain date.

A typical IPO pegs a certain amount of shares for the underwriter to sell at a prearranged price — but without it, investors would have to wait for Slack’s first day of trading to see how many shares are available and for what price.

Slack has raised about $1.2 billion since it launched in August 2013, including a $427 million round of funding led by Dragoneer Investment Group and General Atlantic. The company’s founder, Stewart Butterfield, is currently its chief executive.