Salesforce slumps as co-CEO Bret Taylor's departure called a 'shocker'
Salesforce (NYSE:CRM) shares took it on the chin Thursday, and fell more than 10% as investors showed displeasure with the cloud-based business software company's outlook, and the surprise resignation of co-Chief Executive Bret Taylor.
Taylor, who had been sharing Salesforce's (CRM) top job with company founder Marc Benioff since November 2021, will officially step down at the end of January 2023. Speaking on a conference call late Wednesday, Taylor said he would return to his "entrepreneurial roots", but didn't say anything more about his plans.
Wedbush analyst Dan Ives said Taylor was "one of the mainstays in the Salesforce (CRM) strategy," and that Wall Street would view his departure as "a shocker".
With Taylor leaving Salesforce (CRM), Ives said that it wouldn't be surprising to see Benioff "potentially getting more aggressive on M&A" in the cloud sector.
"This is all about the battle versus Microsoft for market share in the cloud and collaboration space," Ives said.
Ives left his outperform rating on Salesforce's (CRM) stock unchanged, but took down his price target from $215 a share to $200.
In addition to Taylor's departure, Salesforce (CRM) also deal with negative reaction to a mixed fiscal fourth-quarter forecast. The company said it expects to earn between $1.35 to $1.37 a share, excluding one-time items, on revenue in a range of $7.93B to $8.03B. Wall Street analysts had previously forecast Salesforce (CRM) to earn $1.34 a share, on $8.03B in sales.
Stifel analyst Parker Lane called Salesforce's (CRM) fiscal fourth quarter "critical", and that the company's outlook, and larger economic dynamics "make it more challenging to provide an accurate picture" around its full fiscal year. Lane maintained his buy rating on Salesforce (CRM), but trimmed his price target to $175 a share from $185.
Along with Taylor's resignation, and Salesforce's (CRM) outlook, the company also reported third-quarter results that topped analysts' estimates.
Cestrian Capital Research said that despite Salesforce's (CRM) mixed outlook, comments from Benioff suggest he sees easier times ahead for the company.