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'Stay at home stock' Slack Technologies dips ahead of report

FILE PHOTO: The Slack Technologies Inc. logo is seen on a display on the floor of the New York Stock Exchange (NYSE) during the company's IPO in New York, U.S. June 20, 2019. REUTERS/Brendan McDermid

(Reuters) - Shares of Slack Technologies WORK.N dipped 3% on Thursday ahead of the workplace communication platform's quarterly report, pausing a three-month rally fueled by millions of people working from home due to the coronavirus.

A top pick among traders betting on shares of companies benefiting from the recent shutdown of the U.S. economy, Slack on Wednesday closed at a record high after more than doubling from lows in March during Wall Street’s broad selloff.

However, the unprofitable company faces massive competition from Microsoft's MSFT.O Teams workplace chat software, and its recent surge has stretched its valuations.

“The biggest risk to Slack in our view is that the good news is ‘already out there’,” warned Canaccord Genuity analyst David Hynes in a recent client note, maintaining his “buy” rating on the stock.

In Slack’s report after the bell, analysts on average expect a 39.5% jump in quarterly revenue to $188 million and a non-GAAP loss of 6 cents per share, according to Refinitiv. Analysts on average expect an overall loss of $98.5 million for the fiscal quarter ending in April.

Slack is trading at the equivalent of 23 times its expected 12-month sales, according to Refinitiv, an unusually high level, even among other fast-growing software companies.

Reporting by Noel Randewich; Editing by Aurora Ellis

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