Slack Technologies Inc. ended its first day on Wall Street worth nearly $20 billion, after the creator of a popular workplace-chat tool made its public debut via an unconventional route.

The business-communications company began trading on the New York Stock Exchange in a direct listing, through which Slack

WORK, +48.54%

 was able to go public without raising additional funds, as in an initial public offering. The direct-listing route is an option for companies that don’t face an immediate need for new capital and wish to avoid the fees and investor roadshows that come with traditional initial public offerings.

Opinion: Slack stock finds success, but that doesn’t mean other unicorns should follow the same path

“We consider a direct listing the proper vehicle for us, and a way for the public market to be more efficient and let it do its job,” Chief Financial Officer Allen Shim told MarketWacth. “We wanted to avoid the distortion of a traditional IPO in the market.”

Slack shares opened at $38.50, 48% above the reference price of $26 set late Wednesday, before heading slightly higher to close at $38.62. At the closing price, the company has a basic market capitalization of about $19.5 billion, based on a share count of 194 million Class A shares and 310 million Class B shares. Slack last fetched a $7.1 billion valuation in a 2018 funding round, though that valuation counts shares that have not yet vested.

Slack non-IPO: 5 things to know about the direct listing

The offering comes on the heels of several other successful trading debuts by software companies in recent weeks. Zoom Video Communications Inc.

ZM, -0.09%

, PagerDuty Inc.

PD, -1.05%

and CrowdStrike Holdings Inc.

CRWD, -3.07%

 are among the enterprise companies whose shares were well-received by Wall Street this year.

“Growth is still at a premium and especially when you combine that growth with a path to profitability, those companies are hot at the moment,” said Barrett Daniels, a partner with Deloitte & Touche who focuses on technology IPOs. “Clearly the investment community has been rabid for these sorts of offerings.”

The top 10 software IPOs over the past 12 months are trading at nearly double their IPO prices on average, according to Alejandro Ortiz, principal analyst at SharesPost, a pre-IPO marketplace for secondary shares.

See more: Slack listing comes during banner year for tech IPOs

Slack stands in contrast to Lyft Inc.

LYFT, -1.12%

 and Uber Technologies Inc.

UBER, -2.23%

, two high-profile names that have received lukewarm welcomes following their IPOs earlier this year. Though Slack expects it will continue to invest for growth, it saw losses narrow to $140.7 million last year from $181 million a year prior. Uber and Lyft are seeing their losses deepen.

Revenue rose 82% last year, to just over $400 million, though growth slowed to 67% in the first quarter of Slack’s current fiscal year. The company disclosed in its latest filing that just 645 customers, representing 0.7% of all paying Slack customers, generate more than $100,000 in annual recurring revenue. This group accounts for more than 40% of Slack’s overall revenue.

A key goal for Slack is convincing its some 500,000 free customers to pay up for the service.

The company will be hoping for a better post-listing fate than Spotify Technology SA

SPOT, +0.31%

 , which drew attention to the direct-listing concept when it went public last spring via the same route. Spotify shares currently trade about 15% above their reference price but 9% below their opening price. The S&P 500

SPX, +0.95%

has gained 12% since the music-streaming company made its debut in April 2018.

Shim told MarketWatch that he had “a lot of discussions” with Spotify Chief Financial Officer Barry McCarthy about the direct-listing process.

“This made sense for Slack and we think it will be a success,” he said.

The listing appeared to create buzz for Workpoint Entertainment PLC

WORK, +2.88%

, a Thai media company with a ticker resembling Slack’s. Workpoint Entertainment shares were up 2.9% Thursday on high volume.

Slack’s listing comes as the Renaissance IPO ETF

IPO, +0.53%

 has risen 41% so far this year and as the S&P 500 has gained 18% in that time.

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