The “magnitude” of executive turnover at Salesforce Inc. has one analyst thinking twice about its stock.
Baird analyst Rob Oliver downgraded Salesforce shares
to neutral from outperform Thursday, citing the planned departures of Co-Chief Executive Bret Taylor and Slack Chief Executive Stewart Butterfield, among others, as one reason for the move.
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“While we do not want to speculate the reasoning behind these departures, we believe the recent executive turnover adds some execution risk, particularly of this magnitude,” Oliver wrote. “While we are not surprised to see Slack departures in the wake of Taylor’s announcement (he was the champion of the Slack acquisition), it nevertheless represents increased risk.”
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He also worries that “seat-based software could be pressured heading into next year as there has been a wave of recently announced workforce reductions and broader plans to slow hiring.”
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The economic landscape has brought a number of challenges for Salesforce, including exchange-rate pressure, longer sales cycles, and “great deal scrutiny,” according to Oliver. Though he sees the potential for foreign-exchange pressure to lessen in the new few quarters, he says it could “take some time for these macro pressures to abate.”
Salesforce shares were off about 1% in premarket action Thursday following the downgrade. They’ve lost nearly half their value over the course of 2022 to date, while the S&P 500
has fallen 17%.