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Salesforce stock price drops 20% amid macroeconomic challenges

Thursday's activity marks worst share-price performance for Salesforce since 2004

Salesforce stock prices dropped by 20% Thursday, the worst decline since 2004, amid macroeconomic challenges. Despite the share price decline, CEO Marc Benioff said the cloud software company's profitable growth trajectory continues to drive strong cash flow generation. Photo by John Angelillo/UPI
Salesforce stock prices dropped by 20% Thursday, the worst decline since 2004, amid macroeconomic challenges. Despite the share price decline, CEO Marc Benioff said the cloud software company's profitable growth trajectory continues to drive strong cash flow generation. Photo by John Angelillo/UPI | License Photo

May 30 (UPI) -- Salesforce stock prices dropped Thursday on weaker-than-expected company financial results for the first quarter. It was the worst share price performance for Salesforce since 2004.

At the close, shares on the New York Stock Exchange were selling for $218.01, down $53.61, or 19.7%. They dipped a little lower in after-hours trading.

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Revenue for the quarter actually increased by 11% to $9.13 billion, not far off the mark analysts expected. But macroeconomic forces hurt the cloud software company.

"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," Citi analysts said in a note Thursday.

Morningstar said, "We are lowering our fair value estimate for wide-moat Salesforce to $285 per share from $300 after the company reported lower-than-expected fiscal 2025 first-quarter revenue and guided for second-quarter revenue lower than we anticipated."

Morningstar said weakness in Europe and in several verticals such as technology, retail and consumer goods drove market sluggishness.

In a statement, Salesforce CEO Marc Benioff said, "Our profitable growth trajectory continues to drive strong cash flow generation. We are at the beginning of a massive opportunity for our customers to connect with their customers in a whole new way with AI.

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"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."

Morningstar said there are some encouraging "pockets of strength" in Salesforce's revenue trends even as "macroeconomic conditions delivered a gut punch this quarter."

In a SEC filing known as a 10-Q, or quarterly report, Salesforce said its acquisition of Spiff several months ago cost $419 million. It's a platform customers can use to manage and track sales commissions.

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