Salesforce slipped as much as 10.7% on Wednesday after confirming its acquisition of Slack and reporting soft forward guidance.
The workspace-software company announced Tuesday afternoon it will buy Slack for $27.7 billion. A deal that will position the firm to compete with Microsoft in a new software category.
News of the deal first emerged on November 25 and lifted Slack shares as much as 49% through the following trading sessions.
The deal’s price tag marks a 55% premium to Slack’s stock price before the takeover news broke.
At the time of reporting Salesforce equity price stood at $220.77 per share, 8.50% down.
Slack equity price stood at $42.87 per share, 2.19% down.
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Salesforce’s moderate growth forecast for the fourth quarter did not go down well with investors. Fourth-quarter revenue guidance calls for Salesforce’s slowest quarter of year-over-year growth since 2009.
The key numbers according to Business Insider:
Revenue: $5.4 billion, versus the $5.3 billion estimate
Adjusted earnings per share: $1.74, versus the 75 cents estimate
Q4 revenue: $5.67 billion to $5.68 billion, versus the $5.63 estimate
Q4 EPS: 73 cents to 74 cents, versus the 86 cents estimate
“No other major enterprise software company is growing at this rate,” CEO Marc Benioff said. “We’re rapidly moving to an all-digital world, where work happens wherever people are.”
He added that the move will drive a charge of $80 million to $100 million in the current quarter.
Other work-from-home players have fallen as they guide for slower growth through the end of 2020. Zoom Video sank as much as 16% on Tuesday after the firm’s forecasts for weaker revenue growth led investors to question the sustainability of its year-to-date rally.
By: Ifunanya Ikueze