Slack stock hit an all-time high on buyout talks, Salesforce fell
The work messaging app Slack stock price smashes an all-time high of $40 after a staggering rally of 40% on reports of Cloud Software Company Salesforce interest in buying Slack Technologies.
Although the talks are still in the initial phase, this would be Salesforce’s largest acquisition since inception as Slack’s market cap currently stands around $16 billion.
Slack stock price had been under pressure in the past two months after the company reported lower than expected growth in billing. The analyst’s price target downgrades also added to share price volatility in the past few months. On the positive side, its revenue and paid members growth remained strong in the latest quarter.
Buyout talks pushed Slack stock to all-time high
The slack stock hit an all-time high on talks of the potential acquisition. Marc Benioff, the founder, and chief executive of Salesforce, plans to expand Salesforce products and presence in the software markets with acquisitions.
Salesforce stock price soared close to 60% since the beginning of this year as the pandemic-related boost in demand supported its financial numbers. The company has generated quarterly revenue of $5 billion in the latest quarter, with expectations that revenue will hit $5.25 billion in the upcoming quarter. The cloud software company forecasts full-year revenue in the range of $20.8 billion.
Marc Benioff is seeking to outpace Microsoft in cloud markets for offices with back to back acquisition. The potential Slack deal would substantially improve its market share as the work messaging app has almost 130K paid members.
Slacks growth will support Salesforce performance
Slack has generated revenue growth of 50% in the latest quarter, thanks to sharp growth in paid members.
“Paid Customer growth – which is the single most important driver of the business over the long term – accelerated in Q2, up 30% year-over-year. One of the drivers of this acceleration was Slack Connect, which offers seamless, secure inter-company collaboration that we believe is light years ahead of email. We ended the quarter with more than 380,000 connected endpoints, up more than 200% year-over-year, and now more than 52,000 Paid Customers use Connect, up 160% year-over-year,” says Slack CEO Stewart Butterfield.