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SLACK TECHNOLOGIES - DON'T BELIEVE THE HYPE OR TRUST WALL STREET FIRMS

|About: Slack Technologies, Inc. (WORK), Includes: MSFT
Summary

WORK sold off heavily yesterday on continued fears of slowing growth while the me too aggregator attempts to compete with goliath MSFT.

We've never seen anything like this situation even in the "original" bubble dot.com - overhyped technology and a direct listing that allows the CEO and cronies to dump stock immediately.

WORK may have a neat product, but its valuation is absurd at $14BN or 20x sales.  Even if sales doubled, investors would have to wait 10 years for a return.

The direct listing "reference price" of $26 was a fable created by bankers who were paid $20MM to roadshow WORK to investors unsuspecting of the real risk factor - no moat and competition from the world leader in enterprise desktop apps MSFT.

When it's all said and done, WORK will be remembered as the deal that changed SEC direct listing rules because it disadvantaged retail investors. Reiterate SELL.  10x 2019E sales of $650MM plus cash generates an EV of $7BN or $10-$15 per share "fair value".

We note WORK's CEO and cronies continue to sell shares daily, as evidenced by a recurring Form 4 filing by Butterfield Stewart for 2500 shares.  We recommend investors follow suit.

Disclosure: I am/we are short WORK.

Additional disclosure: We intend to provide additional commentary in our ongoing coverage of WORK.