WORK - Embedded Expectations Analysis - 2020 10 15
Slack Technologies, Inc. (WORK:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with an 89.8x Uniform P/E. At these levels, the market is pricing in expectations for profitability to inflect positively, but management may be concerned about revenue growth, Slack Connect, and customer growthSpecifically, management may lack confidence in their ability to sustain revenue growth year-over-year and improve operating leverage. Furthermore, they may be concerned about the shared channel driver for new direct message conversations and the coronavirus impact on their billings. In addition, they may lack confidence in their ability to improve Slack and continue to differentiate their product through Slack Connect. Also, they may be exaggerating the potential of Slack Connect and the progress of its new features, and they may lack confidence in their value proposition
Slack Technologies operates a business technology software platform that brings together people, applications, and data and sells its offering under a software-as-a-service model in the United States and internationally.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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