4 ms·

Their valuation stems from MAUs and majority are on the generous free tier. Do investors really think they can monetize the free users?

zild3d 7y ago
2018 revenue was $400 million, ~doubled the previous year - Slack isn't a company with just a ton of free users and no monetization
- fastball 7y ago
  40x still seems like an insane multiple.
  - rayiner 7y ago
    Assuming they have a margin of 50%, their EBITDA multiple is 80. For comparison, Facebook had an EBITDA multiple of ~50 at IPO time.
    - umeshunni 7y ago
      Slack isn't a consumer company, they are an SaaS enterprise company. Most SaaS enterprise companies trade at far lower multiples. A decent comp for Slack would be Dropbox, which has $1.4B and rough valuation of ~$10B
  - randomsearch 7y ago
    It is overvalued, but then so are a lot of tech companies. I think Slack is a good app, one of the tech startups of true value from this boom cycle, but it’s overvalued. When the likely market adjustment happens, it’ll get a haircut, but it will deservedly survive and prosper.
  - efficax 7y ago
    It's a great time to IPO
- treis 7y ago
  Even if we ignore the time value of money, Slack needs to quadruple its revenue and turn it all into profit to justify a 16B valuation. I can see it happening since so much is being integrated into it from 3rd parties, but it's a very tall order.
- theturtletalks 7y ago
  Solid revenue and solid growth. I was not saying Slack has no monetization, but getting from 400M to 16B is 40X growth. To expand that quickly would require monetizing your existing users most of whom use the free tier. How does Slack really plan to do that?
  - AznHisoka 7y ago
    why do they need to reach 16B in annual revenue? I dont think you will find any tech stock with a market cap of 1x revenue.
    - theturtletalks 7y ago
      Fair enough, but 40X multiplier is on the tail end for tech companies that don’t sell ads (not to say they won’t in the future).
fpvracing 7y ago
I've said this elsewhere in the thread, but Slack could already be making money off me if they offered an attractively priced plan for open source and hobbyist communities and gave workspace owners an easy way to forward that monthly subscription fee onto the users. But at the moment I use Slack a lot and pay them nothing.
dexterdog 7y ago
And how many of the free users are the same people? I am active on 7 or 8 slacks (all free) with at least 5 or 6 different emails. Sure they can easily link my from my device, but do they when they can inflate numbers? The thing that drives me nuts is the pricing model. Why don't they just let users pay for themselves? Then I could be paid on all of the slacks that I use for $10/mo or whatever they charge.

zild3d 7y ago

2018 revenue was $400 million, ~doubled the previous year - Slack isn't a company with just a ton of free users and no monetization

fastball 7y ago
40x still seems like an insane multiple.
- rayiner 7y ago
  Assuming they have a margin of 50%, their EBITDA multiple is 80. For comparison, Facebook had an EBITDA multiple of ~50 at IPO time.
  - umeshunni 7y ago
    Slack isn't a consumer company, they are an SaaS enterprise company. Most SaaS enterprise companies trade at far lower multiples. A decent comp for Slack would be Dropbox, which has $1.4B and rough valuation of ~$10B
- randomsearch 7y ago
  It is overvalued, but then so are a lot of tech companies. I think Slack is a good app, one of the tech startups of true value from this boom cycle, but it’s overvalued. When the likely market adjustment happens, it’ll get a haircut, but it will deservedly survive and prosper.
- efficax 7y ago
  It's a great time to IPO
treis 7y ago
Even if we ignore the time value of money, Slack needs to quadruple its revenue and turn it all into profit to justify a 16B valuation. I can see it happening since so much is being integrated into it from 3rd parties, but it's a very tall order.
theturtletalks 7y ago
Solid revenue and solid growth. I was not saying Slack has no monetization, but getting from 400M to 16B is 40X growth. To expand that quickly would require monetizing your existing users most of whom use the free tier. How does Slack really plan to do that?
- AznHisoka 7y ago
  why do they need to reach 16B in annual revenue? I dont think you will find any tech stock with a market cap of 1x revenue.
  - theturtletalks 7y ago
    Fair enough, but 40X multiplier is on the tail end for tech companies that don’t sell ads (not to say they won’t in the future).

fpvracing 7y ago

I've said this elsewhere in the thread, but Slack could already be making money off me if they offered an attractively priced plan for open source and hobbyist communities and gave workspace owners an easy way to forward that monthly subscription fee onto the users. But at the moment I use Slack a lot and pay them nothing.

dexterdog 7y ago

And how many of the free users are the same people? I am active on 7 or 8 slacks (all free) with at least 5 or 6 different emails. Sure they can easily link my from my device, but do they when they can inflate numbers? The thing that drives me nuts is the pricing model. Why don't they just let users pay for themselves? Then I could be paid on all of the slacks that I use for $10/mo or whatever they charge.