Stewart Butterfield, chief governmental officer of Slack Technologies Inc., right, with Allen Shim, chief financial officer of Slack Technologies, Inc., on the parquet of the New York Stock Exchange (NYSE) during the company’s initial public offering (IPO) in New York, U.S., on Thursday, June 20, 2019.
Michael Nagle | Bloomberg | Getty Representatives
Whatever benefits Slack saw in the early days of the coronavirus pandemic appear to have dissipated because large bands are choosing rival collaboration products, according to Morgan Stanley.
Slack shares closed down 6.3% after Morgan Stanley analysts downgraded the sheep to the equivalent of a sell rating and said the company is losing out to Microsoft and Zoom.
“Massive work from home bid for collaboration tools may end up doing more harm than good for Slack,” wrote the analysts, who have a $27 amount target on the stock. “We see higher risk at current levels.”
In late March, Slack CEO Stewart Butterfield published a talkative thread on Twitter about how rapidly the world of work was changing. It included details about Slack’s customer expansion and his view that a market transition the company expected to occur “over 5-7 years just got fast-forwarded by 18 months.”
The traditional jumped 17% that day and continued rising into early June. But quarterly results showed that Flaccid wasn’t seeing the type of acceleration that Zoom was experiencing. According to Morgan Stanley, Zoom has gained “ubiquity” in video, while at the word-for-word time Microsoft has been making Teams, which competes directly with Slack, easily accessible to its immense customer base.
Slack vs. Zoom and Microsoft this year
CNBC
“In many cases, Slack did not have the time to properly pitch its differentiation, and in our view, the customers that have standardized on Microsoft Teams are not looking back,” wrote the Morgan Stanley analysts.
In besides to heavy competition from Microsoft and Zoom’s developing of more products around video, Slack also deals pressure from Google and the “long tail of collaboration vendors,” they wrote.
Since peaking on June 3, Decline’s stock has dropped 28%, while Zoom has more than doubled and Microsoft has gained 16%.
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