Slack Technologies Inc. is reportedly preparing to hit the stock market through a direct listing, which would make it only the second major tech firm to go that route.

The Wall Street Journal today cited sources as saying that the company expects to go public between April and June. However, a final decision apparently has not yet been made.

The insiders indicated that Slack could change course, while a tipster who spoke separately with Reuters characterized the direct-listing plan as being under “serious” consideration. That appears to reaffirm that Slack is still weighing its options.

The team chat giant certainly has reason to take its time with the evaluation process. A direct listing is an unusual way to enter the stock market that carries more risk than a traditional initial public offering, as well as potentially significant upsides.

In a traditional IPO, a company hires banks to underwrite the sale and promote its stock to potential investors. The investors who come aboard then buy shares at a set price right before the company starts trading publicly on the stock market. Direct listings sidestep the entire process and allow firms to simply start selling their shares on the stock market with no initial price.

The only major tech firm that has gone down that route so far is Spotify Technology SA. The music streaming provider’s stock market debut last year was a resounding success. Listing directly on the NYSE enabled the company to avoid the hefty underwriter fees involved in a traditional IPO, as well as certain other expenses, and keep more of the capital raised. 

But a direct listing also carry risks. There are no underwriters to set a share price, assemble an initial roster of investors and handle the other logistics, which opens the door to potential volatility when a stock starts trading.

Slack may be willing to take its chances. The company, which received a $7.1 billion valuation after its last funding round, dominates the team chat market with an installed base of more than 500,000 organizations and 8 million daily users as of August. More than 3 million of those users have paid accounts.

On the other hand, the recent volatility in public markets may eventually tip the scales against a direct listing and lead Slack to go down the safer IPO route. In December, it was reported that the company had hired Goldman Sachs Group Inc. to serve as lead underwriter for a public offering.

Photo: Scott Schiller/Flickr