Salesforce’s steep decline mirrors the record drop of 27% on July 4, 2004, after the company went public|Ajay_Suresh|CC BY 2.0
Salesforce shares took a steep dive on Thursday, dropping by over 20%, marking its worst performance since 2004. The tumble comes after the company reported lower-than-expected fiscal first-quarter results—17%—on Wednesday, missing revenue estimates for the first time since 2006.
The company reported 11% revenue growth for the first quarter to $9.13 billion, falling short of the anticipated $9.17 billion. The steep decline mirrors the record drop of 27% on July 4, 2004, just after the company went public.
The California-based company, known for its workplace software, attributed the lowered forecast to reduced spending by its business clients on its products and services due to inflation pressures, prolonged deal cycles and heightened budget scrutiny.
The company’s reliance on generative artificial intelligence (AI) to drive returns also faced challenges in materializing within the anticipated time frame.
Looking at the current quarter, Salesforce expects to make between $9.20 billion and $9.25 billion in revenue, lower than Wall Street estimates.
Investors are increasingly growing concerned about the software sector, exacerbated by Salesforce’s disappointing earnings report.
In the broader technology sector, Nvidia, a leader in artificial intelligence, also slid more than 3%, marking its first negative session since its impressive earnings report last week.
Microsoft saw a decline of over 3%, its worst performance since October.