Salesforce Up after Activist Investor Elliott Management Buys Stake in Company
Salesforce shares are up about 5% following surprise news that activist investor Elliott Management has reportedly made a multi-billion dollar investment in the software company, according to sources familiar with the matter.
Downgraded Earlier in January
The unexpected development comes just days after Bernstein analyst Mark Moerdler downgraded the company to underperform from market perform because it has fallen into “growth purgatory.”
“Salesforce has been a controversial name for the last year as growth slowed and the company started to focus on margin,” Moerdler said. “Management guided to hit $50B in revenue and PF operating margins of 25%+ for FY26. But pressure has increased for larger margin improvements, while growth has continued to slow and the company has missed expectations.”
“Comparing the valuation of Salesforce against peers we find that Salesforce is overprice, as it has a similar growth rate to peers by lower margins and lower quality earnings,” Moerdler said. “With a lot more pain ahead for Salesforce and numerous catalysts that may drive a lower multiple, we drop our rating to underperform.”
Activist Investor Elliott Management Takes Stake in Salesforce – Sources
With shares of Salesforce up about 14% this year, but well off over 30% in the past 52 weeks, activist investor Elliott Management Corp has made a multi-billion dollar investment in the cloud-based software firm, according to people familiar with the matter.
It is unclear what Elliott, one of the world’s most prominent activist investors, is pushing for at Salesforce.
“We look forward to working constructively with Salesforce to realize the value befitting a company of its stature,” Jesse Cohn, managing partner at Elliott, told Reuters.
Cohn, who has served on the boards of several technology companies including Twitter and eBay Inc, called Salesforce “one of the preeminent software companies in the world.”
He added that he has “developed a deep respect for Marc Benioff and what he has built.” Benioff co-founded the company and leads Salesforce jointly with Bret Taylor, who is expected to leave the company this month.
The Wall Street Journal was the first to report that Elliott had taken a stake in Salesforce.