Paul Singer-led activist investment firm, Elliott Management Corporation has reportedly taken a multi-billion-dollar stake in cloud service provider Salesforce (NYSE:CRM), the Wall Street Journal stated. Elliott usually takes a board seat in companies it invests in, and also pushes for structural and operational changes to help improve the stock price. Having said that, Elliott’s reason for investing in Salesforce remains unknown.
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Remarkably, another activist firm, Starboard Value, also disclosed a stake in Salesforce in October 2022 and urged the management to improve its profit margins.
Encouragingly, Jesse Cohn, a managing partner at Elliott, said he believes Salesforce is “one of the pre-eminent software companies in the world,” and has “deep respect” for co-CEO Marc Benioff. “We look forward to working constructively with Salesforce to realize the value befitting a company of its stature,” Cohn concluded.
Earlier this month, Salesforce joined a growing number of tech companies undertaking layoffs to streamline costs. The company announced a 10% workforce reduction along with plans to sell certain office spaces and real estate assets.
At the same time, several top executives are leaving Salesforce. These include co-CEO Bret Taylor, Stewart Butterfield, CEO of Slack (which was acquired in 2021), and Tableau CEO Mark Nelson. Notably, CRM stock has gained 12.2% so far this year vis-à-vis losing 32.2% over the past year.
What is the Future of Salesforce Stock?
Amidst the difficult macro backdrop that is impacting most of the tech companies, analysts remain split on Salesforce’s stock trajectory. On TipRanks, CRM has a Moderate Buy consensus rating based on 26 Buys, ten Holds, and one Sell. Also, the average Salesforce price forecast of $189.41 implies 25.2% upside potential from current levels.
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