Slack Seeks To Replace E-mail With Launch Of Virtual Business Platform

Slack Technologies (WORK) has rolled out Slack Connect, a virtual communication platform, which seeks to replace e-mail as a delivery system for businesses to connect securely and work in shared channels.

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Slack Connect lets up to 20 businesses connect with each other. The virtual communication platform allows customers to work securely with multiple partners and vendors in Slack, to build stronger relationships and faster results, the company said.

With Slack Connect, admins can maintain control over their organization’s data and monitor external access. And unlike email, which leaves users open to the risk of spam and phishing, when they work in Slack channels, they receive messages and files only from verified members.

“The introduction of Slack Connect marks a major leap forward in our mission to transform business communication and make people’s working lives simpler, more pleasant and more productive,” said Slack CEO Stewart Butterfield. “Our largest customers, like TD Ameritrade and Iress, put enormous effort into security and compliance and external communication often moves out of band. It goes to text messages and WhatsApp – and the organization has no visibility or ability to retain important records.”

The launch comes after Slack earlier this month announced a new multi-year strategic agreement with Amazon (AMZN) to deliver solutions for enterprise workforce collaboration.

As a result, development teams can communicate and manage their AWS resources from inside Slack. Slack will migrate its Slack Calls capability for voice and video calls to Amazon Chime, AWS’s communications service, and use AWS’s global infrastructure.

Shares in Slack have surged 42% year-to-date, as the company added 12,000 net new paid customers in the first quarter and revenue grew 50% revenue year-over-year. The stock dropped 6% to $31.97 as of Wednesday’s close.

Five-star analyst Ryan MacWilliams at Stephens raised Slack’s price target to $37 from $32 and maintained a Buy rating, saying that the company’s value proposition has been further accentuated by the work-from-home environment.

“Slack is best positioned to win over the hearts and minds of enterprise customers with its sole focus on collaboration,” MacWilliams wrote in a note to investors. “If successful, we believe the company would receive excess rewards as the only player at scale advocating for this collaboration transformation (especially as organizations and employees standardize on the platform).”

Overall, the stock scores a cautiously optimistic Moderate Buy consensus from the Street with 11 Buy ratings versus 7 Hold ratings and 2 Sell ratings. Meanwhile the average analyst price target stands at $34.18 (6.9% upside potential). (See WORK stock analysis on TipRanks).