The Reason Why Salesforce Stock Rose Today

Salesforce Stock

Salesforce Stock (NYSE:CRM)

On Monday, Salesforce (NYSE:CRM) stock rose on rumors that the company may lay off more than the 8,000 workers it indicated it would reduce its workforce by last week.

The Salesforce stock was up by 4% as of 10:58 a.m. ET on Monday, perhaps benefiting from the same trend that was lifting the rest of the technology sector.

What’s the Reason?

In an all-staff meeting on Thursday, CEO Marc Benioff appeared to hint at more reductions in staff after the first wave of layoffs. Benioff said that half of the firm’s account executives are responsible for almost all of the company’s transactions, meaning that there is either excessive waste at the company or poor sales force performance.

After recent acquisitions like Slack and Tableau, employees who joined the company were disproportionately affected by the first wave of layoffs. The employees at Tableau, a data platform business that Salesforce purchased in 2019 for $15.7 billion, were struck particularly hard.

Noting that some of the company’s offices had less than 10% occupancy, Benioff said that he was aiming for $3 billion to $5 billion in cost reduction and that he was targeting real estate and personnel.

What’s Next?

During its Investor Day conference in September, Salesforce Stock stated its intent to increase operating margins and tighten expense controls. Investors think the corporation needs to become more active after a series of expensive acquisitions and substantial expenditure on stock-based pay.

Even though layoffs affect actual individuals, Wall Street often welcomes the reductions because they believe they will improve profits. Benioff said the firm had employed too many workers during the epidemic in the original layoff notice.

With management’s fresh emphasis on profitability, the cloud software business can finally turn a profit.

Featured Image: Megapixl @ Andreistanescu

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About the author: I'm a financial journalist with more than 3 years of experience. I have worked for different financial companies and covered stocks listed on ASX, NYSE, NASDAQ, etc. I have a degree in marketing from Bahria University Islamabad Campus (BUIC), Pakistan.