Shares of Slack Technologies (WORK) - Get Report were dropping sharply Tuesday after rival Microsoft (MSFT) - Get Report announced that its 'Teams' messaging app has surpassed more than 20 million daily active users.
Last month, Slack reported 12 million daily active users in the second quarter, which was already behind the 13 million users Teams was reported to have in July.
"Last month Teams customers participated in more than 27 million voice or video meetings and performed over 220 million open, edit, or download actions on files stored in Teams," wrote Jared Spataro, corporate vice president for Microsoft 365.
Spataro's blog contained testimonials from Alcoa and Telefonica executives highlighting the benefits of using Teams.
"Shifts in Teams is much more efficient for organizing people," says Friopjofur Tóomasson, a plant supervisor. "If I had to use one word to tell you what Teams means to me, it's 'efficiency.' Shifts saves me at least an hour a day."
Wedbush has a bearish outlook on Slack because of the competition from Microsoft.
"We continue to believe that while Slack has the first mover advantage in this new market opportunity, Microsoft represents the biggest risk for investors given its massive enterprise installed base and the fact that it offers Teams with no extra charge to its Office 365 business customers," Wedbush analyst Daniel Ives said in a note Tuesday.
Slack shares were down 9.3% to $20.97 on Tuesday. Microsoft traded flat.