Slack stock drops after 20 million users of Microsoft teams

In a nutshell: Things in the workplace productivity market are not looking good for Slack as the Teams app from Microsoft is steadily increasing its lead in user numbers and analysts are telling investors to sell. However, Slack remains optimistic recently to say that the user base of Microsoft is over-inflated.

Microsoft announced on Tuesday that there are more than 20 million active daily users in its Teams collaboration app. This says the number is 54 percent higher and places it well ahead of the last reported 12 million user number in October by Slack.

According to the reports, Slack Technologies shares fell by midday by more than 10 percent. Overall, the stock of the labor-collaboration firm is down about 19 percent since the company went public in June and has dropped by over 50 points since a day-one high of $38.62 per share.

In November 2016, Microsoft launched teams. Despite Slack having a two-year head-start, in July this year, Microsoft surpassed the start-up numbers, announcing more than 13 million active users, up 3 percent over the 10 million reported in January by its competitor.

The growth in the use of teams is due in part to the adoption of the workplace collaboration technology by big-name companies. Alcoa, L’Oreal, and Telefonica are just a few of the big businesses that began to use their app.

CNBC notes, Microsoft CEO Satya Nadella and Vice President Jared Spataro said that Teams have not only been able to attract some Slack users, they have also found their way into more than 350 companies with at least 10,000 employees using the software.

Slack downplayed Teams ‘ rise in October saying Microsoft simply inflated the figures by including those who only use the software for voice calls.

Spataro confirmed that anyone who uses the “chat, call, share a file, edit a document, or participate in a meeting” software counts as a user in their numbers. He added that it is not considered use just to have the app open.

The fact that groups are included in Microsoft’s Office 365 plans is another factor contributing to the rise in user base. Office 365 contributes approximately one-third of Microsoft’s total revenue together with Azure, Dynamics 365 enterprise software, and LinkedIn services. Just in Q3 2019, this measure alone brought $11.5 billion.

Market analysts, meanwhile, advise customers to sell their Slack shares.

“Our field tests suggest that Slack will have significant difficulties entering the company further, considering Microsoft’s[ Teams] product’s substantial competitive offer that could slow growth going faster than expected by Street,” said Daniel Ives and Wedbush analyst Strecker Backe. Officially, on November 7, the market forecasters issued Slack a “sell score” as a warning to their investors.

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