Slack (WORK) stock tanks on weak guidance

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Slack shares plunged in extended trading on Thursday after the maker of messaging software provided a disappointing forecast for the fiscal first quarter. 

The stock sank more than 20% to $17.03. That adds to a 9.7% drop during regular trading, as the shares fell alongside the broader market, which had its worst day since 1987.

Slack said revenue in the quarter ending in April will be $185 million to $188 million, trailing the $188.4 million estimate, according to a survey by Refinitiv.

Here are the key numbers for the latest quarter:

  • Earnings: Loss, excluding certain items, of 4 cents, vs. loss of 5 cents as expected by analysts, according to Refinitiv.
  • Revenue: $181.9 million, vs. $174.1 million as expected by analysts, according to Refinitiv.

Slack has benefited from the move to cloud computing as more employees working across offices and time zones turn to chat for communication instead of e-mail. Fourth-quarter revenue jumped 49% from a year earlier.

“As the shift from email to channel-based messaging platforms continues, the largest companies around the world are choosing to standardize on Slack because of our enterprise-grade scalability, security, open platform, ease-of-use and innovative roadmap,” CEO Stewart Butterfield said in the statement.

Still, Slack is staring at a spiraling market as investors fret over the economic impact of the coronavirus. The company didn’t address the issue in its earnings statement but added the outbreak as a risk factor in a financial filing and said that it’s impacting operations.

“This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, customers, economies, and financial markets globally, potentially leading to an economic downturn,” the filing said. “It has also disrupted the normal operations of many businesses, including ours. This outbreak could decrease technology spending, adversely affect demand for our product and harm our business and results of operations. It is not possible for us to predict the duration or magnitude of the adverse results of the outbreak and its effects on our business or results of operations at this time.”

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