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Salesforce Shares Tumble 16% After Revenue Miss

By:
James Hyerczyk
Updated: May 29, 2024, 20:37 GMT+00:00

Key Points:

  • Salesforce shares drop 16% after reporting weaker-than-expected revenue and disappointing guidance.
  • The company's revenue misses expectations, causing a sharp decline in Salesforce's stock price.
  • Despite a significant net income increase, Salesforce's conservative guidance pressures stock.
Salesforce

In this article:

Salesforce Shares Drop 16% After Earnings Report

Salesforce shares dropped 16% in extended trading on Wednesday following the release of its quarterly earnings report. The cloud software company reported weaker-than-expected revenue and issued guidance that fell short of Wall Street’s expectations.

At 16:35 GMT, Salesforce, Inc is trading $223.87, down $48.22 or -17.72%.

Daily Salesforce, Inc

Earnings Performance

Salesforce reported adjusted earnings of $2.44 per share, slightly above the $2.38 per share expected by analysts surveyed by LSEG. However, the company’s revenue for the quarter came in at $9.13 billion, missing the anticipated $9.17 billion. This revenue shortfall was a key factor in the sharp decline in Salesforce’s stock price.

Guidance Disappoints

Looking ahead, Salesforce provided guidance for the current quarter that also disappointed investors. The company expects adjusted earnings per share to be between $2.34 and $2.36 on revenue of $9.2 billion to $9.25 billion. Analysts had forecasted adjusted earnings per share of $2.40 on revenue of $9.37 billion, according to LSEG. This conservative outlook further pressured Salesforce’s stock in after-hours trading.

Quarterly Revenue and Income Growth

Despite the revenue miss, Salesforce reported an 11% increase in revenue compared to the same period last year, with the fiscal first-quarter revenue rising from $8.25 billion to $9.13 billion. Net income saw a significant increase, jumping to $1.53 billion, or $1.56 per share, from $199 million, or 20 cents per share, a year ago. This substantial improvement in net income highlights the company’s ability to increase profitability despite revenue challenges.

Impact on the Dow Jones Industrial Average

As a member of the Dow Jones Industrial Average, Salesforce’s performance can influence the broader market index. The significant drop in Salesforce’s share price could weigh on the Dow, reflecting investor sentiment and potentially leading to broader market repercussions.

Market Forecast

Given the weaker-than-expected revenue and cautious guidance, Salesforce’s short-term outlook appears bearish. Traders and investors may see continued volatility in the stock, especially as the company navigates through its revenue challenges and market expectations. The upcoming analyst call will be crucial for providing further insights into Salesforce’s strategic responses to these financial pressures.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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