Slack stock price crashes 15% after disappointing growth numbers

Shares of Slack (NYSE: WORK) collapsed around 15% on Friday after the tech giant failed to capitalize on the work-from-home regime during the time of national lockdowns. 

Fundamental analysis: Slack beats estimates, but still disappoints

Slack, a team messaging app, said it lost $0.02 per share in the quarter, compared to a loss of $0.06 per share expected from the analysts. Revenue also came in higher than expected, at $201.7 million vs $188.1 million expected from Wall Street. As a result, the tech firm said it expects a full-year adjusted loss to be 2 cents less than what it had previously predicted. 

Revenue growth stands at 50%, which is almost in line with 49% from the previous quarter. However, the analysts were disappointed with the fact that Slack’s competitor, Zoom, reported a 169% increase in the revenue growth for the quarter. 

“What you saw with Zoom, what you saw with Teams is a great indication that this is not apples-to-apples and that the products are not truly competitive with one another,” CEO Stewart Butterfield said on a conference call on Thursday.

Overall, Slack reported progress. The number of new subscribers rose 12,000, which is much higher than 5,000 in the previous two quarters combined. 

Separately, Slack reported it entered into a partnership with Amazon to transfer its voice and video calling features over to Amazon’s Chime platform. An agreement also means that Amazon staff members will be now able to use Slack, although it is unclear at the moment how many of 840,000 employees will be doing this. 

“As Chime has additional features, we’re looking at bringing the mobile experience to include video, which it doesn’t today. We’re also looking at transcription,” says Brad Armstrong, vice president of business and corporate development at Slack.

Technical analysis: Shares plunge on disappointing growth

Similarly to the reported earnings for the previous quarter, Slack stock price crashed in the after-hours trading on Thursday. Although the stock hit an 18-month high yesterday, today’s collapse in price action means it trades around 20% lower compared to yesterday’s high.

As seen in the chart above, the buyers forced the price to tag a resistance – 161.8% Fibonacci resistance – before moving lower on disappointing growth results. The price action then touched the key short-term support near the $30 mark, before rotating higher to recover a portion of earlier losses. 

Summary

Shares of Slack plunged 15% following the disappointing growth numbers. Despite the fact that the tech firm beat market estimates, it came nowhere near the massive increase in growth reported by its competitor Zoom yesterday.