I won't beat around the bush. I like Slack Technologies (WORK) . My success trading it thus far has been muddled at best, but I use it every day. There's a misconception it is just for work, but I have Slack groups for fantasy football, writer's groups, even neighborhood groups. I've seen a mistrust with older Facebook (FB) groups who have migrated to Slack, and the difficulty of following along with Twitter (TWTR) group chats. For whatever reason, we're pigeon-holed into this belief that it is only a work platform, but I'm seeing a growing social media acceptance as well. Will Slack be able to monetize that is another question, but the fact I don't see any of the social media chatter surrounding the platform is surprising. And that may be a good thing for bulls.
Slack came public in the non-traditional format. It has given insiders a chance to sell earlier than what we see in the traditional format which has likely created a bit of an umbrella over the price preventing moves higher. If we examine the daily chart, we can see a clear downward channel. Upper left to lower right doesn't scream confidence. What does draw my attention is the curving support line. I know we all want straight lines connecting A to B to C to determine what is or is not support or resistance, but parabolic moves exist in trading. These moves encompass curved lines. They can be used both on moves higher and lower. Slack is an example.
Based on the curving of the lows, it appears as if the $28.50 area marks a turning point for the bearish action. Earnings tonight could change that in a snap, but that is what I would use as a hard stop. Any close below $28.50 will stick Slack in the penalty box for the next several months, if not longer, however, I see a relief bounce to $32, if not higher. A close above $32 should squeeze us quickly to $34.
Wall Street anticipates revenue around $140 million this quarter, rising to $152.6 million next quarter. I believe focus will be on revenue and billings growth, expected at 52% rather than the bottom line number. Unfortunately, initial quarterly reports for public companies as of late have been messy on the bottom line. If Wall Street makes that the focus, then I expect Slack to have a rough go tomorrow, however, I don't believe that will be the case. I'm optimistic heading into the report, and for trading over the next few weeks. Call it a ride or die mentality, but I am an owner of the stock into earnings with the consideration of selling September $35 calls against shares and selling September $29 puts and $25 puts into the number. I would also consider a long September $27 put and short 2 September $25 puts if you have a bearish tilt, but are willing to own the stock in the low $20s.