Slack, the workplace chat app with an avid following in Silicon Valley, landed on Wall Street with a US$20bn valuation on Thursday, more than three times what it was worth when it last raised money only nine months ago.
The company's shares opened at US$38.50 and rose as high as US$42, marking a smooth start to trading for a rare direct listing on the New York Stock Exchange.
The first trade was confirmed shortly after midday in New York, after traders at Citadel Securities were able to find a clearing price for the initial buy and sell orders flooding to the floor of the exchange. Direct listings do not involve the advance book building or underwriting provided by investment banks in a traditional initial public offering, and do not put any restrictions on shareholder sales.
The opening trades valued the shares 22 per cent above the highest price paid in the private market, implying a moderate first day premium for the shares, in contrast to the huge spikes seen in some other cloud software companies which have carried out traditional IPOs this year. Stewart Butterfield, co-founder and chief executive, said the company had been hoping to avoid a high premium, which often reflects the scarcity of shares available to investors in a traditional IPO.
Despite the moderate Wall Street opening, the early trading still represented a huge windfall for the company's founders and early backers. Investors who took part in Slack's $427m fundraising in September last year paid only $11.91 a share. The opening trades valued Mr Butterfield's personal stake at $1.6bn, while Accel, Slack's largest venture capital investor, was sitting on shares worth $4.6bn.