Salesforce shares tumble 20% in worst day since 2004; here's why

Cloud software vendor Salesforce clocked its worst performance in the US stock market in the last 20 years, with its shares tumbling by 20% during the trading session on Thursday.

The company's shares settled at $218.01 on Nasdaq, down by $53.61 or 19.74% as compared to the last closing price.

The last time when Salesforce stock witnessed such a steep fall dates back to July 4, 2004, when the shares had plummeted by 27%.

Why Salesforce shares fall 20% on Thursday?

The reason behind the sharp decline was the weaker-than-expected results posted by the company in the first quarter of calendar year 2024, along with a weak estimate shared for the second quarter.

The California-headquartered software major posted a revenue of $9.13 billion in the January-March period, which was up 11% year-on-year but fell short of the estimate of $9.17 billion, as shared by LSEG analysts.

According to experts, the investor confidence was dampened more due to the weak projection shared for the April-June period. The company sees revenue in the range of $9.2 billion to $9.25 billion, which is lower as compared to the estimate of $9.37 billion shared by the analysts tracked by LSEG.

Salesforce's expected adjusted earnings per share for the second quarter is in the range of $2.34 to $2.36, which is also lower as compared to the estimate of $2.40 shared by the analysts surveyed by LSEG.

Following the lacklustre Q1 results, Citi analysts lowered their target price for Salesforce shares to $260 fro $320.

“With slowing growth, lack of de-risked estimates and more active M&A we are comfortable on the sidelines awaiting improving growth or more evidence of Data Cloud/GenAI momentum/monetization,” stated a note released by Citi analysts.