Salesforce (CRM) stock plunged more than 20% in early trading Thursday, easily making it the worst Dow Jones stock of the day. The slide comes after the software-as-a-service (SaaS) provider came up short of revenue expectations for its fiscal first quarter and issued a soft outlook for the second quarter.
In the three months ended April 30, Salesforce's revenue was up 11% year-over-year to $9.13 billion and its earnings per share (EPS) increased 44.4% to $2.44.
"Our profitable growth trajectory continues to drive strong cash flow generation," Salesforce CEO Marc Benioff said in a statement. "We are at the beginning of a massive opportunity for our customers to connect with their customers in a whole new way with AI. As the world's #1 AI [artificial intelligence] CRM, we're incredibly well positioned to help companies realize the promise of AI over the next decade."
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results were mixed compared with analysts' expectations. According to CNBC, Wall Street was anticipating revenue of $9.17 billion and earnings of $2.38 per share.
For the second quarter, Salesforce said it expects revenue in the range of $9.2 billion to $9.25 billion and EPS to land between $2.34 to $2.36. The guidance is lower than the $9.4 billion in revenue and $2.40 per share in earnings Wall Street is expecting.
This is due in part to "ongoing headwinds from professional services," said Amy Weaver, chief financial officer of Salesforce, in the company's earnings call, amid "deal compression and customers delaying or slowing projects."
For the full year, Salesforce maintained its revenue guidance of $37.7 billion to $38 billion and raised its EPS guidance to a range of $9.86 to $9.94 from $9.68 to $9.76. Analysts are expecting revenue of $38.1 billion and earnings of $9.76 per share.
Is Salesforce stock a buy, sell or hold?
The tech stock has struggled so far in 2024, and was up a modest 3% year to date through the May 29 close. Still, analysts are upbeat towards CRM stock. According to S&P Global Market Intelligence, the consensus analyst target price for the blue chip stock is $306.51, representing implied upside of over 41% to current levels. Meanwhile, the consensus recommendation is a Buy.
Needham is one of the more bullish firms on CRM stock with a Buy rating and $345 price target. However, in a note released this morning, analyst Scott Berg said "investors may hesitate" after the weak first-quarter results.
"Salesforce reported a surprising revenue miss in Q1 compared to the guided midpoint as macro dynamics hit bookings, and an EPS beat largely due to lower than expected other income and taxes," Berg wrote in a note to clients. "Guidance was unchanged at the top line, signaling management's confidence in their ability to execute after the miss."
Berg's $345 price target implies upside of nearly 60% to current levels.
Related Content
-
4 Black Friday Scams to Watch Out forThe deals are heating up, but so are the scams. Here's how to spot some of the most common Black Friday scams this holiday season.
-
Ramit Sethi Tells Us the Biggest Retirement Mistake You Can MakeThe MasterClass instructor, author and behavioral finance expert on what could be costing retirees their happiness.
-
Holidays Are a Rich Time to Talk Money With Young Adults: A Financial Adviser's Guide for ParentsThe most productive family financial conversations start with open-ended questions and a lot of listening. Don't let this opportunity pass you by.
-
How Women of Wealth Are Creating a New Model of Giving Through Family OfficesWomen who are inheriting wealth today are shifting from traditional philanthropy to creating sustainable systems to fund philanthropic gifts into perpetuity.
-
I'm a Financial Planner: This Retirement GPS Helps With Navigating Your Drawdown PhaseReady to retire? Here's how to swap your 'peak earnings' mindset for a 'preserve-plus-grow' approach instead of relying on the old, risky 4% rule.
-
Donating Stock Instead of Cash Is the 2-for-1 Deal You'll Love at Tax TimeGiving appreciated stock or using a donor-advised fund (DAF) this year would be smarter than writing a check to support your favorite causes. Here's why.
-
Traveling With Purpose: What Zambia and Zimbabwe Taught Us About Slowing DownDon't treat retirement trips like they're an exercise in ticking off boxes. Slowing down and letting adventure unfold can create more meaningful memories.
-
Investment Expert: Is Your Retirement Portfolio Too Late to the Profit Party?If you're following the usual retirement investment model, you could be missing out on a potential profit period that companies see in the run-up to their IPOs.
-
Losing Your Job? A Financial Planner's 6 Steps to Survive and ThriveWhether pink slips are just rumors at your company or layoffs have already landed, there are things you can do today to make the best of a tough situation.
-
Oil Prices vs Investor Returns: It's What's Beneath the Surface That CountsEngineering, geology and operating discipline can determine the success of oil and gas projects as much as the cost per barrel.
