Slack Stock Upgraded — Twice! Here’s what You Need into KnowThe Motley Fool #Motley_FoolAugust 25, 2019
Every day, Wall Street analysts upgrade some stocks, downgrade others, and “initiate coverage” on a few more.
Slack stock has shed 20% of its value since that first day of trading.
Over the past couple of years alone, Slack has ramped up revenue by four times, growing from $105 million in sales in 2017 to $454 million booked over the past 12 months, according to data provided by S&P Global Market Intelligence .
Revenue that quadrupled in two years is expected to grow only 50% next year, then decelerate into the 30s in subsequent years, according to S&P Global data.
For example, the analysts highlights the surge of insiders unloading shares when the lockup period expires as a key risk to stock performance in “traditional IPOs.”
Historically, explains MKM in a note covered on StreetInsider.com , this dynamic has shaved about 20% off the stock price of your average tech IPO “during a six-week period around lock-ups.”
And yet Slack stock is down 20% regardless.
So in a nutshell, what MKM seems to be thinking here is that Slack’s 20% decline allows investors the chance to buy a typically depressed-by-risk tech stock…without taking on the risk that typically depresses the stock price!
And personally, I’d add the risk that investors might have to wait four years before they can begin valuing Slack on earnings, rather than revenue.
Then again, if Slack’s upcoming report shows sales growing stronger than forecast, or contains guidance suggesting profitability will arrive sooner than analysts expect, they might not have to wait four years for Slack shares to rise again.
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