The Lyft and Uber IPOs did not “eat San Francisco alive,” but Grocery Outlet and messaging service Slack will test investors’ appetite with their stock offerings Thursday.
The highly touted Slack IPO is not a traditional IPO. As Fortune explains, Thursday’s highly-anticipated stock offering of the workplace messaging service will in fact be a “direct listing,” meaning Slack will not actually introduce new shares. They will simply put existing employee and investor shares onto the market, allowing them to cash out but not raising any extra capital. These shares will be traded on the New York Stock Exchange under the ticker name “WORK,” and the company will be seeking a $17 billion valuation. So do expect dimwitted armchair-investor exuberance over a tidal wave of new wealth — at least, until the market opens Thursday morning and we see how well it performs.
Analysts seem to think the direct listing is a shrewd move, because it circumvents much of the investment banker and underwriting costs of a typical IPO. “If you enlist a bunch of bankers to help you got to market, the bankers are going to be very involved in crafting what your pitch deck looks like, how you tell your story to investors,” market-watcher Paul Condra told Yahoo Finance. “A company like Slack, I think, has a very honed message.” Analysts point out that Spotify used the same method when introducing their shares in April 2018, and enjoyed one of the largest opening days ever — and the stock has done gangbusters trading ever since.
Unsurprisingly, Silicon Valley is already seeing the ramifications of this not-yet-even traded stock offering. The Silicon Valley Business Journal reports that a Slack knockoff Mattermost just pulled a $50 million venture capital investment from Y Combinator.
Emeryville’s Grocery Outlet is heading to Wall Street. The discount grocer plans to list on the Nasdaq Thursday under the ticker symbol “GO,” offering 17.2 million shares of common stock priced between $15 and $17 per share. https://t.co/oTGwSG5Kve pic.twitter.com/Q7geLvg3pP— San Francisco Chronicle (@sfchronicle) June 19, 2019
But stock market offerings aren’t just for douchebags in Patagonia vests. The Chronicle reminds us that Grocery Outlet will also IPO Thursday on the NASDAQ, and this one’s a real IPO. The Emeryville-based discount grocer, which has more than 300 stores along the west coast, is expected to debut at around $15-$17 a share.
The big question is what will Slack’s offering price will be; and oddly, we don’t know yet. According to Yahoo Finance, “Slack’s opening share price will be determined in a price discovery process,” the conclusion of which will not be announced until 9:30 a.m. ET Thursday morning. Yahoo reports that private Slack shares have traded between $8.37 and $23.41, and an analyst tells Barron's the shares could be worth upwards of $30.
This raises the distinct possibility that at the end of the day Thursday, tech darling Slack will trading at a lower price than stock for Grocery Outlet Bargain Market, which would be just hilarious.