Salesforce shares: gaping void?

The software giant forecasts annual revenues below expert expectations, which weighs on the share price despite an increase in profits in the last quarter.

The US software company Salesforce has dampened investors' hopes of a significant sales boost from its new artificial intelligence products. After publishing its quarterly figures on Wednesday, the company forecast revenues of between 40.5 and 40.9 billion US dollars for the current fiscal year. This forecast fell short of the average analyst expectations of 41.5 billion dollars, which led to disappointment in the market. The company estimates the adjusted operating profit margin at 34 percent, which is slightly above the expert forecasts of 33.9 percent. In the past fiscal quarter, Salesforce was able to increase sales by 7.6 percent to just under 10 billion dollars. Profits improved by a remarkable 18 percent to 1.7 billion dollars. Despite this positive development in profits, the market initially reacted negatively to the cautious future forecast.

Share price partially recovers

The initial disappointment of market participants was clearly reflected in after-hours trading. After the figures were announced, the price of Salesforce shares initially fell by around 10 percent, but was able to limit this loss in the further course of trading. At the end of after-hours trading, the stock was still down around 2.4 percent. The discrepancy between the company's sales forecasts and the higher market expectations caused the negative price reaction, with investors particularly hoping for growth impulses from AI products. For the first quarter, Salesforce expects adjusted earnings per share between $2.53 and $2.55 on revenue between $9.71 and $9.76 billion. These forecasts are also below market expectations, which has increased investors' concerns about growth potential.

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