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Why Slack Technologies Stock Fell on Tuesday

By Daniel Sparks – Jul 14, 2020 at 1:38PM

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The tech company's stock has fallen for two days in a row.

What happened

Shares of Slack Technologies (WORK) tumbled on Tuesday, declining as much as 7.5%. As of 1:10 p.m. EDT, shares were down 4%.

The growth stock's decline was likely primarily due to an overall sell-off in many growth stocks Tuesday morning.

A chart showing a stock price declining

Image source: Getty Images.

So what

Some investors may be booking some profits on growth stocks like Slack following incredible year-to-date gains.

Shares of Slack, which provides a channel-based messaging platform to help teams collaborate, have risen substantially in 2020. The stock is up more than 40% year to date. Many other growth stocks have similarly jumped this year. A pullback in growth stocks over the last two trading days, therefore, hasn't been surprising.

Optimism for Slack has been fueled by the company's rapid revenue growth, which accelerated to a year-over-year growth rate of 50% in the fiscal first quarter. The growing trend of working from home is catalyzing adoption of Slack's platform. 

Now what

Investors should keep an eye on Slack's fiscal second-quarter results, which will likely be released in early August. Was the company able to keep up its strong momentum? Management guided for fiscal second-quarter revenue to increase 42% to 44% year over year during the period. But this outlook was likely conservative.

Daniel Sparks owns shares of Slack Technologies. The Motley Fool owns shares of and recommends Slack Technologies. The Motley Fool has a disclosure policy.

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