Why Salesforce Stock Dipped Today

What happened

Actions of salesforce.com (NYSE: CRM) fell 8.9% on Wednesday after the cloud computing leader announced a successful acquisition alongside its third-quarter fiscal 2021 results.

So what

Salesforce revenue jumped 20% year-over-year to $ 5.42 billion, beating Wall Street expectations for $ 5.25 billion in revenue. The software giant also recorded strong profit growth; its adjusted operating income climbed 23% to $ 1.1 billion.

The coronavirus pandemic is pushing more businesses to embrace work-from-home devices and distributed workforces, which in turn is accelerating their move to the cloud. “We are rapidly moving towards a fully digital world, where work takes place wherever people are,” CEO Marc Benioff said in a press release.

Investors, however, focused more on plans to buy Salesforce Soft Technologies (NYSE: WORK). He agreed to buy the workplace collaboration platform for $ 27.7 billion in cash and stocks.

Now what

Benioff called the deal a “match made in heaven”. He plans to combine Slack’s messaging tools with Salesforce’s ecosystem of software solutions to create “the operating system for the new way of working.” “Together, Salesforce and Slack will shape the future of business software and transform the way everyone works in the fully digital world and from anywhere,” said Benioff.

Investors, however, seem less enthusiastic about the combination, especially when considering the huge price Salesforce is paying. Citi analyst Walter Pritchard on Wednesday downgraded his rating on Salesforce stock from buy to neutral and lowered his price forecast from $ 300 to $ 250. Pritchard said the deal’s $ 27.7 billion price tag makes it “difficult to see a positive return.”