IMPORTANT POINTS:
- Salesforce shares sank more than 20% on Thursday morning and are headed for their worst day since 2004.
- This occurred because, for the first time since 2006, the company’s estimated revenues fell short of Wall Street’s expectations.
- Some analysts began to lower their price targets for the company, triggering sharp selling of shares.
At the time of writing, Salesforce shares were down more than 20% to $215, heading for their worst day on the stock market since 2004.
This came after the tech giant revealed its first-quarter results, which missed revenue estimates for the first time since 2006.
In detail, its income rose 11% to $9.13 billion, when Wall Street experts estimated at least $9.17 billion.
For the second quarter, the software firm projected earnings slightly lower than experts expected: First, it expects earnings per share of $2.34 on revenue between $9.2 billion and $9.25 billion.
Analysts, however, assumed earnings per share of at least $2.40 and revenue of more than $9.37 billion.
What does Wall Street think about the future of Salesforce?
Citigroup: The firm said that the strategy that Salesforce chose in terms of marketing and execution affected the company’s performance.
For this reason, they reduced their price target for CRM from $323 to $260. In any case, they still expect profits in the coming months.
Goldman Sachs: Despite the results, analysts reiterated their buy rating for the company, although they admitted that Salesforce will need to regain investor confidence.
Morgan Stanley: The bank’s strategists also maintained its buy rating, as they believe it will benefit greatly from its AI-based business model, especially in 2025.
“While the quarter was a disappointment and likely reduces investor conviction in a near-term growth rebound, evidence suggests the impacts are more cyclical than secular,” they argued.