Analyst: Microsoft Teams Service With 20M DAUs Is 'Clearly A Negative' For Slack Investors

A blog post this week by Microsoft Corporation (NASDAQ: MSFT) revealed its Microsoft Teams service now has more than 20 million users.

Benzinga · 11/20/2019 17:15

A blog post this week by Microsoft Corporation (NASDAQ: MSFT) revealed its Microsoft Teams service now has more than 20 million users. One analyst said the success of Teams is bad news for competitor Slack Technologies Inc (NYSE: WORK).

The Analyst

Mizuho analyst Gregg Moskowitz reiterated his Buy rating and $160 price target for Microsoft and his Neutral rating and $20 target for Slack.

The Thesis

Moskowitz said Teams seems to be gaining momentum, which is "clearly a negative" for Slack. The latest numbers suggest Teams added 7 million new daily active users in the past five months compared to adding just 1 million new daily active users in the previous 10 months.

“As we have stated previously, we believe that Teams significantly reduces WORK’s pricing power and limits the enterprise penetration opportunity,” Moskowitz wrote in a note.

Given the strategic importance of workplace communication, Moskowitz said Microsoft will likely continue to invest heavily in improving Teams. In the blog post, Microsoft noted many of its Teams customers start out with the basic text chat features before adding more advanced features.

Teams users engaged in more than 27 million voice and video meetings last month and performed more than 220 million actions on files during that period.

While Moskowitz said Slack still has the best-in-class workplace collaboration platform, Microsoft clearly seems to be closing the gap.

Benzinga’s Take

While Slack investors can take comfort in the fact that Moskowitz still sees Slack’s platform as the best product, these trends are certainly troubling. It can be extremely difficult for an $11.7 billion company like Slack to fend off a $1.15 trillion company like Microsoft that has nearly unlimited resources.

Slack's stock traded higher by 1.4% to $21.48 per share at time of publication. The stock traded north of $37 when its IPO hit the market on June 21.

Do you agree with this take? Email feedback@benzinga.com with your thoughts.

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