Marc Benioff, co-founder and chief executive officer of Salesforce.com Inc., speaks during the WSJDLive Global Technology Conference in Laguna Beach, California, U.S., on Wednesday, Oct. 26, 2016. The conference brings together an unmatched group of top CEOs, founders, pioneers, investors and luminaries to explore tech opportunities emerging around the world.
Patrick T. Fallon | Bloomberg | Getty Images
Turbulence in the upper ranks at Salesforce isn’t sitting well with Wall Street.
In the three trading days since the Taylor news landed alongside Salesforce’s third-quarter earnings report, the stock has had two of its three worst days of the year, plunging 8.3% and 7.4%, respectively. Salesforce has now lost 47% of its value for the year, compared to the Nasdaq’s 28% drop, and is trading at its lowest since March 2020, the early days of the Covid-19 pandemic.
Taylor, who joined Salesforce in 2016 through the acquisition of his startup Quip, said he’d “decided to return to my entrepreneurial roots.” Benioff said on the earnings call, “We have to let him be free, let him go, and I understand, but I don’t like it.”
Butterfield made it clear that he’s leaving for different reasons.
“I’m not going to do anything entrepreneurial,” Butterfield wrote in a Slack message that was viewed by CNBC. “As hackneyed as it might sound, I really am going to spend more time with my family (as well as work on some personal projects, focus on health and generally put time into those things which [are] harder to do when one is leading a large organization).”
While Taylor and Butterfield are the highest-profile exits, they’re far from alone among Salesforce’s executive ranks.
Last month, Salesforce said Gavin Patterson, the president and strategy chief, would be leaving in January, and on Thursday Mark Nelson, president and CEO of Salesforce’s Tableau product, tweeted that it was his last day.
Along with Butterfield, Slack is losing product chief Tamar Yehoshua and Jonathan Prince, senior vice president in charge of marketing, brand and communications, people familiar with the matter previously told CNBC. Noah Weiss, senior vice president of product at Slack, will succeed Yehoshua, Butterfield said in a Slack message. Butterfield is being succeeded by Lidiane Jones, an executive vice president at Salesforce who joined in 2019.
Salesforce’s three-day plunge
CNBC
‘Two elephants in the room’
Slack was a pandemic-inspired acquisition. With workers forced to communicate remotely, Slack’s popular chat app blew up. In a series of tweets on March 25, 2020, Butterfield said the company had experienced “early signs of a surge in teams created and new paid customers unlike anything we had ever seen,” adding that the shift from email to chat channels, “which we believed to be inevitable over 5-7 years just got fast-forwarded by 18 months.”
Salesforce was so jazzed about Slack’s expansion that it paid over $27 billion for the company at a forward price-to-sales ratio of 24, one of the highest multiples ever in software. Taylor’s name was all over the deal, even though he wasn’t yet co-CEO. Taylor reached out to Butterfield multiple times in August and September 2020 about a possible acquisition, and the two negotiated throughout the process, which culminated in an agreement announced on Dec. 1 of that year, according to a filing with the SEC.
Salesforce’s purchase of Slack closed in July 2021, and its stock peaked four months later at almost $310. Since then, it’s lost 57% of its value, closing on Monday at $133.93.
Like its high-valued tech peers, Salesforce has been hurt this year by soaring inflation and rising interest rates, which have pushed investors into parts of the market deemed safer in a slowdown. Salesforce’s results haven’t helped. Last week, the company reported third-quarter revenue growth of 14%, the slowest expansion for any period since the company’s IPO in 2004. Its forecast for the fourth quarter is for growth of 8% to 10%.
In a break from third-quarter tradition, Salesforce neglected to provide guidance for its next fiscal year.
Analysts at Guggenheim wrote in a report that there were “two elephants in the room.” The first was omitting guidance for the coming year.
“The second elephant in the room is why Bret Taylor decided to give up his high-profile co-CEO and vice chair position after only a year,” wrote the Guggenheim analysts, who have the equivalent of a hold rating on the stock. The analysts reminded clients that three years ago, Keith Block resigned as co-CEO after 18 months on the job and wrote that “the company seems to have struggled since.”
After Taylor’s announcement last week, Wedbush analysts wrote that, “the Street will view this as a shocker with Taylor one of the mainstays in the CRM strategy.”
A Salesforce spokesperson declined to comment beyond reiterating a statement the company sent earlier regarding Butterfield’s departure.
On Thursday, Wolfe Research downgraded Salesforce stock to the equivalent of hold from a buy. They wrote that the company is moving into “a new and difficult chapter” after execution errors, big-name departures and slowing revenue growth.
The only day in 2022 that Salesforce’s stock has been hit harder than it was Thursday or Monday was at the very beginning of the year. On Jan. 5, UBS downgraded Salesforce and Adobe, telling clients that enterprise tech spending was pulled forward by the pandemic, leading to slower continued growth for the two companies.
Altimeter Capital CEO Brad Gerstner said Thursday that he’s moving out of the “bomb shelter” with Nvidia and into a position of safety, expecting that the chipmaker is positioned to withstand President Donald Trump’s widespread tariffs.
“The growth and the demand for GPUs is off the charts,” he told CNBC’s “Fast Money Halftime Report,” referring to Nvidia’s graphics processing units that are powering the artificial intelligence boom. He said investors just need to listen to commentary from OpenAI, Google and Elon Musk.
President Trump announced an expansive and aggressive “reciprocal tariff” policy in a ceremony at the White House on Wednesday. The plan established a 10% baseline tariff, though many countries like China, Vietnam and Taiwan are subject to steeper rates. The announcement sent stocks tumbling on Thursday, with the tech-heavy Nasdaq down more than 5%, headed for its worst day since 2022.
The big reason Nvidia may be better positioned to withstand Trump’s tariff hikes is because semiconductors are on the list of exceptions, which Gerstner called a “wise exception” due to the importance of AI.
Nvidia’s business has exploded since the release of OpenAI’s ChatGPT in 2022, and annual revenue has more than doubled in each of the past two fiscal years. After a massive rally, Nvidia’s stock price has dropped by more than 20% this year and was down almost 7% on Thursday.
Gerstner is concerned about the potential of a recession due to the tariffs, but is relatively bullish on Nvidia, and said the “negative impact from tariffs will be much less than in other areas.”
He said it’s key for the U.S. to stay competitive in AI. And while the company’s chips are designed domestically, they’re manufactured in Taiwan “because they can’t be fabricated in the U.S.” Higher tariffs would punish companies like Meta and Microsoft, he said.
“We’re in a global race in AI,” Gerstner said. “We can’t hamper our ability to win that race.”
YouTube on Thursday announced new video creation tools for Shorts, its short-form video feed that competes against TikTok.
The features come at a time when TikTok, which is owned by Chinese company ByteDance, is at risk of an effective ban in the U.S. if it’s not sold to an American owner by April 5.
Among the new tools is an updated video editor that allows creators to make precise adjustments and edits, a feature that automatically syncs video cuts to the beat of a song and AI stickers.
The creator tools will become available later this spring, said YouTube, which is owned by Google.
Along with the new features, YouTube last week said it was changing the way view counts are tabulated on Shorts. Under the new guidelines, Shorts views will count the number of times the video is played or replayed with no minimum watch time requirement.
Previously, views were only counted if a video was played for a certain number of seconds. This new tabulation method is similar to how views are counted on TikTok and Meta’s Reels, and will likely inflate view counts.
“We got this feedback from creators that this is what they wanted. It’s a way for them to better understand when their Shorts have been seen,” YouTube Chief Product Officer Johanna Voolich said in a YouTube video. “It’s useful for creators who post across multiple platforms.”
CEO of Meta and Facebook Mark Zuckerberg, Lauren Sanchez, Amazon founder Jeff Bezos, Google CEO Sundar Pichai, and Tesla and SpaceX CEO Elon Musk attend the inauguration ceremony before Donald Trump is sworn in as the 47th U.S. president in the U.S. Capitol Rotunda in Washington, Jan. 20, 2025.
Saul Loeb | Via Reuters
Technology stocks plummeted Thursday after President Donald Trump’s new tariff policies sparked widespread market panic.
Apple led the declines among the so-called “Magnificent Seven” group, dropping nearly 9%. The iPhone maker makes its devices in China and other Asian countries. The stock is on pace for its steepest drop since 2020.
Other megacaps also felt the pressure. Meta Platforms and Amazon fell more than 7% each, while Nvidia and Tesla slumped more than 5%. Nvidia builds its new chips in Taiwan and relies on Mexico for assembling its artificial intelligence systems. Microsoft and Alphabet both fell about 2%.
The drop in technology stocks came amid a broader market selloff spurred by fears of a global trade war after Trump unveiled a blanket 10% tariff on all imported goods and a range of higher duties targeting specific countries after the bell Wednesday. He said the new tariffs would be a “declaration of economic independence” for the U.S.
Companies and countries worldwide have already begun responding to the wide-sweeping policy, which included a 34% tariff on China stacked on a previous 20% tax, a 46% duty on Vietnam and a 20% levy on imports from the European Union.
China’s Ministry of Commerce urged the U.S. to “immediately cancel” the unilateral tariff measures and said it would take “resolute counter-measures.”
The tariffs come on the heels of a rough quarter for the tech-heavy Nasdaq and the worst period for the index since 2022. Stocks across the board have come under pressure over concerns of a weakening U.S. economy. The Nasdaq Composite dropped nearly 5% on Thursday, bringing its year-to-date loss to 13%.
Trump applauded some megacap technology companies for investing money into the U.S. during his speech, calling attention to Apple’s plan to spend $500 billion over the next four years.