Please ensure Javascript is enabled for purposes of website accessibility

Why Slack Stock Just Surged 17%

By Rich Smith – Updated Feb 11, 2020 at 10:19AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors reacted to news about IBM; Slack added clarity later in the day.

Editor's note: After this article was published, Slack filed an 8-K with the SEC in response to the Business Insider article to note that IBM is not a new customer. Slack noted: "IBM has been Slack's largest customer for several years and has expanded its usage of Slack over that time. Slack is not updating its financial guidance for the fourth quarter of the fiscal year ended January 31, 2020 or for the fiscal year ended January 31, 2020." Check out Fool Evan Niu's rundown of what happened with the stock.

What happened

Slack (WORK) stock is soaring -- up 17.3% as of 12:15 p.m. EST on news that the workplace messaging app has signed up International Business Machines (IBM 2.27%) and its 350,000 employees to use the service for their internal communications.  

Business Insider broke the story this morning, calling this Slack's "biggest customer deal ever."  

Chalkboard reading Biggest Sale Ever

Image source: Getty Images.

So what

At last report, Slack had 105,000 paying corporate customers for its services, and was still growing briskly, with customers up 30% year over year. Total daily active users of Slack had topped 12 million.

Today's IBM announcement, if confirmed, will grow that latter number by about 3% -- not bad for a day's work, and a single added customer. However, so far at least, neither IBM nor Slack have confirmed the news.

Now what

What might confirm the news will be Slack's fourth-quarter earnings release. The company hasn't announced a date for its publication yet, but third-quarter earnings came out on Dec. 4 and, if you assume the next quarter's results will come out about three months later, that would mean we probably have less than a month to go before Slack's next update.

Analysts are forecasting a loss for the company (about $0.05 per share) on sales of $174.1 million. A month's worth of revenues from Slack's new biggest customer though, could bump up that revenue number significantly.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Slack Technologies. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

International Business Machines Corporation Stock Quote
International Business Machines Corporation
IBM
$121.51 (2.27%) $2.70
Slack Technologies, Inc. Stock Quote
Slack Technologies, Inc.
WORK

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.