Slack Shares Sink After First Ever Earnings
QUEST: Well, the love affair didn't last long, and the honeymoon seems to be over for Slack. Shares of the office app are down 13 percent pre-market on the company's first earnings report since going public. They recovered, they're still off some 3 percent. If you look at the messages, you'll see the details. Slack filed to go public in April, $400 million in revenue and $139 million in losses. Direct listed on the Stock Exchange in June, $23 billion was the evaluation. Now, the early outlook is up, slowing growth, service disruptions, investors not pleased, company not profitable. Paul La Monica joins me from New York. Is there anything in what we heard from the company today, Paul, that wasn't imminently foreseeable?</s>PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I don't think so, Richard, I think people should have been able to figure out that Slack, even though it wasn't a traditional IPO was a direct listing as you pointed out. There was a lot of hype surrounding this company and much like Uber and Lyft which are obviously not an allegros in the sense that they are ride-sharing companies that focus more on consumers, but are also not profitable. They were wildly hyped unicorns, and you know, their results, you know, weren't that great either. So, I think it really does show that there is this zeal for a lot of these hot unicorns going public to try and, you know, live up to the hype. And you know, I think it's one thing to attract venture capital interest from VCs that are willing to play the longer-term game. You know, investors are a lot more fickle in the public markets.</s>QUEST: You know, I know that Slack is very popular. I can't say I've used it myself, but I believe it's the backbone for you and many of your colleagues. I mean --</s>LA MONICA: I envy you, Richard.</s>QUEST: Look at the share price, though. I mean, what is it that's the risk here? Is it that a MeToo comes along and steals its clothes? Is it that it just doesn't catch on? Where's the risk and what is the risk?</s>LA MONICA: Well, I think there are two. As far as competition, right now, to its credits, Slack really is the predominant app for office collaboration tools right now. I mean, people do love and use this a lot, and I would say from first-hand experience, it is used pretty extensively in the CNN Business newsroom. That being said, there's this little software company in Redmond, Washington, you may have heard of called Microsoft that has something called Teams that's integrated in Office 365. Microsoft is a much bigger company obviously than Slack is. If Microsoft really wants to get aggressive and try and out-slack Slack, it's possible that Nadella and co could do that. So, I think that's a risk. But also as you point out, there are a lot of companies that are paying subscriptions to be honest, but there are also free trials as well. And you know, I think it's remains to be seen whether or not it's a company that can generate enough revenue growth to make them profitable. Because revenue growth is already slowing, that's not --</s>QUEST: Right --</s>LA MONICA: Something you want to see this early at a stage as an</s>IPO. QUEST: Absolutely, not in the cycle. If we take a quick look at the market and how it's trading at the moment, Paul, because come on, guru, does the news we've heard -- oh, we slipped under 400, but does the news we've heard today justify this sort of reaction, not that it matters, we've got it anyway?</s>LA MONICA: Yes, I don't know if it necessarily does, but you could argue that some of the recent sell-offs weren't justified either. What's worrying me now is that we are so headline-driven, all it takes is one rogue Trump tweet, one with --</s>QUEST: Yes --</s>LA MONICA: China is coming back to the table and we have these exaggerated moves. I'd like to see an actual meeting take place with some real progress on a trade deal and not just tweets and headlines.</s>QUEST: Good point, Paul, always good to have you, thank you, sir.</s>LA MONICA: Thank you, sir.</s>QUEST: As we continue, an exclusive trip to a Galaxy of phones. We'll be inside Samsung, next.