September looked like it was shaping up to be a disaster for the stock market, but Wednesday morning's trading suggested that such a downbeat assessment might well be premature. After three days of substantial selling, major benchmarks rebounded with a vengeance. Investors seemed eager to jump back into the stocks that had gotten hit hardest to begin the month. As of just before 11 a.m. EDT, the Dow Jones Industrial Average (^DJI -1.62%) was up 446 points to 27,946. The S&P 500 (^GSPC -1.72%) picked up 63 points to 3,395, while the Nasdaq Composite (^IXIC -1.80%) gained 272 points to 11,119.
There was plenty of good news among individual stocks, but not every company was lucky. Slack Technologies (WORK) was a notable laggard on Wednesday morning, as investors reacted negatively to the collaboration platform's recent performance. Meanwhile, Tiffany (TIF) got bad news on the merger and acquisition front after a deal that investors were counting on appears to have fallen through.
Cutting no Slack
Shares of Slack Technologies were down 14% Wednesday morning. The workplace collaboration software platform provider released its latest financial results late Tuesday, and investors weren't pleased with what they saw.
On the surface, Slack's numbers seemed solid. Total revenue climbed by nearly half year over year as the company added 8,000 net new paying customers. That brought the number of clients up to more than 130,000, which was higher by 30% from year-ago levels. Slack boasted 87 clients generating annual recurring revenue of $1 million or more, up from just 49 such customers a year ago.
Yet shareholders didn't seem satisfied with Slack's slower growth in calculated billings, which were higher by just 25%. Moreover, although losses have narrowed significantly, they haven't yet turned into profits even on an adjusted basis.
Slack is riding a wave of growth, anticipating top-line gains of 38% to 39% for its current 2021 fiscal year. However, investors are questioning whether longer-term growth trends will remain in place. Until they're reassured, it might be difficult for Slack's stock to regain lost ground.
LVMH backs out of Tiffany deal
Elsewhere, Tiffany shares fell 10%. The luxury jeweler's planned acquisition by LVMH is now off the table, and sparks are set to fly between the two companies.
A press release from LVMH Wednesday told an intriguing story. LVMH says it "learned of a letter" from French officials urging the company to put off the Tiffany acquisition until 2021. However, LVMH maintained that it would instead comply with the existing terms of the merger agreement, which set a closing deadline of Nov. 24. LVMH also said that Tiffany had requested a delay until Dec. 31, and that LVMH won't be able to complete the acquisition as it currently stands.
Some see the news as convenient. There's been speculation for months that LVMH might want to renegotiate the Tiffany deal. That's understandable, given how the COVID-19 pandemic crushed the retail sector.
Tiffany has filed suit to enforce the $16 billion merger agreement. Regardless of the outcome, relations between Tiffany and LVMH are certain to be strained for the foreseeable future. That adds another negative to an already tough environment for retail stocks generally.