Fundamental analysis: A game-changer
Salesforce is in talks to acquire Slack, according to media reports. The value of the deal remains unknown for now, however, Slack’s market value broke above $20 billion after Wall Street Journal’s report about the acquisition talks.
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Salesforce registered several major acquisitions over recent years, using its market cap growth to buy emerging companies. The San Francisco-based company bought MuleSoft for $6.5 billion in 2018 in an effort to link its cloud applications. A year later, Salesforce acquired data visualisation company Tableau for $15.3 billion.
The deal between Slack and Salesforce would be one of the largest in the software industry, together with IBM’s acquisition of Red Hat for $34 billion last year and Microsoft’s takeover of LinkedIn for $27 billion 4 years ago.
“This would be a game-changer move for Benioff & Co. to further build out its collaboration engine and product footprint as cloud spending ramps across the enterprise,” said Dan Ives from Wedbush Securities.
Shares of Microsoft also declined following the WSJ report on the deal as Microsoft Teams is one of Slack’s direct competitors.
“Our primary competitor is currently Microsoft Corporation,” Slack said when it was looking to go public last year.
Technical analysis: Shares explode higher
Slack’s stock closed up nearly 38% on Wednesday after the news broke out that Salesforce is interested in acquiring the business communication platform. Shares of Salesforce were 5% in the red on Wednesday and the software company is expected to publish its Q3 earnings next week.
Slack daily chart (TradingView)
Slack share price came close to taking out the previous record high set on the first day of trading in June last year. Shares closed 37.59% higher in the anticipation of the deal to push monthly gains to nearly 60%.
Salesforce is in talks to purchase Slack, a deal that could be announced as early as next week according to media reports. As a result, shares of Slack exploded 37%.