Salesforce stock is the worst day of earnings forecasts since March 2020 CEO Marc Benioff speaks at the World Economic Forum in Davos, Switzerland, January 23, 2020.

Adam Garashia | CNBC

Salesforce’s share price plummeted 10% on Wednesday. This is the plunge since March 2020, when concerns over the expansion of the Covid-19 pandemic shocked the market.

This decline masked the disappointing earnings forecast for the fourth quarter, followed by better-than-expected third-quarter performance and Bret Taylor’s promotion to the role of co-CEO with Salesforce’s Marc Benioff.

According to an analyst surveyed by Refinitiv, Salesforce said in a report that earnings per share for the December quarter were 72-73 cents, below the average estimate of 81 cents. Revenues were lower than expected, but Salesforce raised revenue guidance from $ 7.22 billion to $ 7.23 billion. This is in close agreement with the estimated $ 7.22 billion.

Analysts at Atlantic Equities wrote in the report that Salesforce’s forecasts “may reflect management’s conservatism.”

Analysts said “results were strong” in the third quarter, recommending the purchase of shares. “But the slightly disappointing guidance will give the stock a break after a strong move over the last six months.”

After Wednesday’s slide, Salesforce’s share has risen by about 8% in the last six months, following the S & P 500, which has risen by more than 9%. As of mid-afternoon, the stock was trading at about $ 256.

Salesforce executives were bullish on the fourth quarter, backed by $ 285 million in sales from Slack, and were expected to see a 24% increase in revenue, according to earnings announcements. Salesforce’s acquisition of more than $ 27 billion in communications software company ended in July.

Salesforce Chief Financial Officer AmyWeaver has suggested over the phone that cost increases can be seen in many ways, including travel and expenses.

“In the fourth quarter, we expect additional investment in employees and growth, as well as a slight increase in expectations for T & E,” Weaver said. “And that would cause a drop in operating profit q-over-q.”

The fall in Salesforce shares on Wednesday is raising concerns about the omicron Covid variant. U.S. health officials said Wednesday that the United States had identified the first case in California of a new, highly mutated coronavirus variant.

Salesforce’s share price last deteriorated on March 16, 2020, when it plunged 16%. That day, the US stock index plunged the most since the October 1987 plunge.

look: Jim Cramer on Salesforce Downbeat Forecasting

Salesforce stock is the worst day of earnings forecasts since March 2020

Source link Salesforce stock is the worst day of earnings forecasts since March 2020

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