The New York Stock Exchange has set the so-called “reference price” for Slack’s planned public listing on Thursday at $26 per share. At that price, which would be used as a starting point to build a book of buy and sell orders for opening trades, the messaging firm would have a fully diluted valuation of $15.6 billion, and a market capitalization of $13.9 billion when including restricted stock units expected to convert to stock upon listing.
Whether public investors will support that valuation, which would be more than 20 times Slack’s expected revenue this year, is of course the big question. Slack is planning to go public through an unusual direct listing, in which it doesn’t sell new shares and allows all shareholders to trade freely. How the stock performs will provide signs about the direct listing process and the state of subscription software valuations.
The reference price is close to the $26.38 average price of Slack trades on private secondary markets, in which shares are bought from earlier holders, for the four months ending May 30. Some recent trades were going for more than $31 per share, but at smaller volumes. Larger institutional trades in recent weeks were hovering closer to the mid-20s, according to a person familiar with the matter, which may have been seen as a more reliable indicator.