Thursday was a big day for Salesforce — but not in a good way. Salesforce’s stock price fell nearly 20% on Thursday, its largest single-day drop in share price since 2004.
The reason: Salesforce’s first-quarter earnings missed Wall Street’s expectations for the first time in nearly two decades, with sluggish sales linked to weak demand in Europe. Analysts at Bank of America and Morningstar substantially lowered their price targets for the stock but maintained a fairly positive outlook for its long-term performance.
“While profitability remains a bright spot, we see a path for continued margin expansion even as the firm invests in AI innovation,” wrote Morningstar’s Dan Romanoff. Like many technology firms, Salesforce has been investing in new AI-based features in a bid to keep up with the generative AI craze. In April, the company officially launched Einstein Copilot, its suite of AI tools for businesses that it’s marketing as a safer, corporate-focused alternative to mainstream bots offered by ChatGPT and Google.
Wedbush Managing Director Dan Ives said in an interview with Yahoo Finance that he thinks Salesforce is still a “gold standard tech play,“ seeing its first-quarter miss “as a speed bump, not the start of a structural decline.”
Despite their messages of overall confidence in Salesforce, the company’s stock plunge on Thursday dragged the Dow Jones Industrial Average down more than any one stock has since 2008.
