The stock of messaging software company Slack has fallen by almost 10% after Microsoft announced that its rival Teams product has 20 million users.
The plunge of Slack stock was attributed to an announcement by Microsoft that its own Teams messaging software now has 20 million users. Comparatively, Slack stated in September that it had just 12 million users.
While Slack's presence is undeniable in many offices and newsrooms in the US, the company is currently being challenged by Microsoft through its Teams platform. According to Wall Street analysts, they are nervous about Slack's future.
Slack's stock has now declined by almost 20% from its reference price of $26 on the day of its Wall Street debut. It has also fallen by almost 50% from its peak price of $42, which it reached on its first trading day in late June.
The company opted for a non-traditional way by listing its shares directly on the New York Stock Exchange instead of selling shares via an initial public offering (IPO). Slack's market value is around $11 billion, compared to its current competitor Microsoft, which is worth over $1.1 trillion.
In order to unseat Slack with its Teams collaborative workplace app, Microsoft is offering a free version of the tool and is also bundling Teams into its Office 365 Business Premium and Office 365 E3 cloud-based subscription offerings.
Slack pointed out that Microsoft may have a larger installed user base due to Windows and Office 365, but they argued that not every Windows user is actually embracing Teams. Brian Elliott, Slack's vice president and general manager of platform, wrote in a blog post: "Engagement is what makes Slack work — you can't transform a workplace if people aren't actually using the product."
Elliott claimed that Slack's paid customers spend more than 9 hours per workday connected to Slack and about 90 minutes a day actively using the service.
