Salesforce Sails Forth

Image source: Salesforce

What's going on?

Salesforces bumper results showed that the sun is shining on the cloud giant once more.

What does this mean?

Attention is nice, but getting it from activist investors who buy a stake in a company in a bid to rejig operations and raise share prices typically means you need to pull your socks up on the double. So with Salesforce catching the eye of no fewer than five activist investors lately, its no surprise the companys had to take action. See, business has been dwindling as cost-cutting firms rein in their cloud spending, but Salesforce had an ace up its sleeve: cutting some costs of its own, especially those notorious money pits known as employees. That helped push one key measure of profitability to a record high for Salesforce last quarter, only topped by a surprisingly upbeat forecast for the year ahead.

Why should I care?

For markets: Stock superstar.
The market had a hunch that activist pressure would get Salesforce moving, with the firms stock performing over twice as well as the Nasdaq even before the latest results broke. And investors were understandably happy when the update proved them right but it was the companys plan to increase share buybacks and its murmurings about artificially intelligent offerings that really delighted them. All in all, investors sent the stock toward its biggest one-day gain since 2020, outperforming the S&P 500 by nearly 40% this year.

The bigger picture: Ch-ch-ch-ch-changes.
With more activists entering the Salesforce boardroom, the winds of change are probably going to keep on blowing. If analysts are right, Salesforce could start offloading some of the businesses it snapped up in recent years as well as some more pesky employees in pursuit of ever-greater profit.

Originally posted as part of the Finimize daily email.

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