In a nutshell: Things are not looking good for Slack in the workplace productivity market as Microsoft's Teams app steadily increases its lead in user numbers and analysts tell investors to sell. Slack, however, remains optimistic recently saying that Microsoft's user base is over-inflated.

On Tuesday, Microsoft reported that its Teams collaboration app has more than 20 million active daily users. It says that number is up by 54 percent and puts it way ahead of Slack's last recorded user number of 12 million in October.

Following the news, shares in Slack Technologies dropped more than 10 percent by midday. The work-collaboration company's stock is down overall about 19 percent since the company went public in June and has fallen by more than 50 points since a day-one peak of $38.62 per share.

Microsoft launched Teams in November 2016. Despite Slack having a two-year head-start, Microsoft surpassed the startup's numbers in July this year, announcing over 13 million active users, up 3 percent over the 10 million its competitor reported in January.

The surge in the use of Teams is attributed in part to big-name companies adopting the software for workplace collaboration. Alcoa, L'Oreal, and Telefonica are just a few of the large corporations that have started using its app.

CNBC notes, Microsoft CEO Satya Nadella and Vice President Jared Spataro said that not only has Teams been able to lure some Slack users away, it has also found its way into more than 350 enterprises with at least 10,000 employees using the software.

In October, Slack downplayed the rise of Teams saying that Microsoft was essentially padding the numbers by including those who only use the app for voice calls.

Spataro confirmed that anyone using the software for "chat, placing a call, sharing a file, editing a document, or participating in a meeting," counts as a user in its numbers. He added that just having the app open is not considered usage.

Another factor contributing to the increase in user base is the fact that Teams is included in Microsoft's Office 365 subscriptions. Along with Azure, the Dynamics 365 enterprise software, and LinkedIn products, Office 365 contributes nearly one-third of Microsoft's total revenue. This metric alone brought in $11.5 billion just in Q3 2019.

Meanwhile, market analysts are advising clients to sell their Slack shares.

"Our checks in the field indicate Slack will have significant difficulty further penetrating the enterprise given the significant competitive offering from Microsoft's [Teams] product that could slow growth going forward quicker than the Street is anticipating," said Daniel Ives and Strecker Backe, analysts for Wedbush. The market prognosticators officially gave Slack a "sell rating" on November 7 as a warning to its investors.