Testing All-Time Highs - Buy & Hold Thesis for 2020
After having fully realized my previous trade idea (30-36$ upwards trend into earnings), yesterday 
WORK ended the day at 38.38$, closing in on 38.62$ of all time closure. With earnings scheduled for Thursday after market closes, the stock is primed to test the 42$ handle, the historic intraday high.
I expect a strong quarter with positive momentum after earnings and the full reversal of the bear trade that rested on the assumption that Teams would eat out Slack. I see upside towards the 60$ handle until the end of the year. Given Slack's superior product, the recently established market leadership by Microsoft - mainly driven by Office 365 inertia integration - is set to be questioned as new users gravitate towards the best option. At 20 times sales, the upwards pressure is likely to intensify given the comparison to Zoom or Crowdstrike metrics.
Microsoft understands the existential threat posed by Slack and, therefore, is doubling down on the usage of its monopoly position to tilt user choice towards Teams. This trend is likely to continue in the second half of the year but doesn't alter the market structure where Slack continues its organic growth, even within Office 365 users. Microsoft faces a catch-24 situation with this rapid user growth, since its value directly antagonizes other sides of their business, namely the value of Microsoft Outlook and Email based communication. Without a financial incentive to make email obsolete, Microsoft business strategy will be force to cannibalize its own earnings or alter its product structure to fend this trend. Whatever the course taken, the integration of new users in this business communication infrastructure increases the market size for Slack penetration.
Slack has a superior product, more apps integrations and better user satisfaction. Its "cool" Apple-like approach is showing signs of incremental growth, with employees starting to demand Slack over Teams, as IBM is the latest example.
In a longer time-frame, the multi-file-based work structure is set to change, with the reduced importance of software allocated towards it, like G Suite or Office 365. In this new fluidly established communication pattern I expect Slack to tap a new market where its embedded artificial intelligence (some already available) could prove decisive and project it to be the next Google.
WORK ended the day at 38.38$, closing in on 38.62$ of all time closure. With earnings scheduled for Thursday after market closes, the stock is primed to test the 42$ handle, the historic intraday high.I expect a strong quarter with positive momentum after earnings and the full reversal of the bear trade that rested on the assumption that Teams would eat out Slack. I see upside towards the 60$ handle until the end of the year. Given Slack's superior product, the recently established market leadership by Microsoft - mainly driven by Office 365 inertia integration - is set to be questioned as new users gravitate towards the best option. At 20 times sales, the upwards pressure is likely to intensify given the comparison to Zoom or Crowdstrike metrics.
Microsoft understands the existential threat posed by Slack and, therefore, is doubling down on the usage of its monopoly position to tilt user choice towards Teams. This trend is likely to continue in the second half of the year but doesn't alter the market structure where Slack continues its organic growth, even within Office 365 users. Microsoft faces a catch-24 situation with this rapid user growth, since its value directly antagonizes other sides of their business, namely the value of Microsoft Outlook and Email based communication. Without a financial incentive to make email obsolete, Microsoft business strategy will be force to cannibalize its own earnings or alter its product structure to fend this trend. Whatever the course taken, the integration of new users in this business communication infrastructure increases the market size for Slack penetration.
Slack has a superior product, more apps integrations and better user satisfaction. Its "cool" Apple-like approach is showing signs of incremental growth, with employees starting to demand Slack over Teams, as IBM is the latest example.
In a longer time-frame, the multi-file-based work structure is set to change, with the reduced importance of software allocated towards it, like G Suite or Office 365. In this new fluidly established communication pattern I expect Slack to tap a new market where its embedded artificial intelligence (some already available) could prove decisive and project it to be the next Google.
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