Salesforce.com Inc. Co-Chief Executive Marc Benioff speaks during an interview with Bloomberg TV at the 2022 Dreamforce conference in San Francisco, California, United States, Thursday, September 22, 2022. Off shared his excitement about the data: San Francisco’s overall homeless population has decreased. Photographer: David Odisho/Bloomberg via Getty Images
David Odisha | Bloomberg | Getty Images
shares sales force The stock plunged 18% on Thursday morning, its worst day since 2008.
Salesforce shares fell after the company reported fiscal first-quarter results on Wednesday that fell short of Wall Street’s revenue forecasts for the first time since 2006.
The cloud software provider said revenue rose 11% to $9.13 billion in the quarter, missing analysts’ expectations of $9.17 billion, according to LSEG.
Salesforce expects second-quarter adjusted earnings of $2.34 to $2.36 per share on revenue of $9.2 billion to $9.25 billion. Analysts polled by London Stock Exchange Group (LSEG) expected adjusted earnings of $2.40 per share on revenue of $9.37 billion.
Citi analysts said broader macroeconomic challenges “resurfaced” in Salesforce’s first quarter. They noted that performance at other software companies was also soft during this period, but that execution issues and changes in Salesforce’s go-to-market strategy also affected the company’s results.
Analysts lowered their price target on the stock to $260 from $323.
“With slower growth, lack of de-risking and more aggressive M&A, we can comfortably sit on the sidelines and wait for improved growth or more data cloud/GenAI momentum/monetization,” Citi analysts wrote in a note Thursday. evidence.
Other companies are taking a more optimistic stance.
Goldman Sachs analysts reiterated their buy rating on the stock and said they view Salesforce as a “high-quality software franchise.” They said the company needs to regain investor confidence, but added they believe easing interest rates, the end of the election cycle and generative artificial intelligence will be growth catalysts.
Goldman Sachs analysts said in a note on Wednesday that Salesforce is “an undervalued Gen-AI winner.” They also see room for “meaningful margin expansion,” the report said.
Morgan Stanley analysts said that seeing Salesforce’s performance, it is difficult for people’s confidence in its growth not to be “shaken.” However, they believe the company will benefit from generative artificial intelligence, especially next year.
Analysts maintained an overweight rating on the stock.
“While a disappointing quarter may reduce investor confidence in the near-term growth rebound, evidence suggests the impact is more cyclical than long-term,” they wrote in a note on Thursday.
—CNBC’s Michael Bloom and Jordan Novet contributed to this report
