Salesforce stock on pace for worst day since 2004

of stocks Salesforce The stock price fell 20% into Thursday morning, on track to be its worst day of trading in the last 20 years. The worst trading day on record was July 4, 2004, when the stock price fell 27% just days after the company went public.

Salesforce reported first-quarter earnings on Wednesday, reporting revenue that fell short of Wall Street expectations for the first time since 2006. The company also issued weaker-than-expected guidance.

The cloud software vendor said its revenue rose 11 percent to $9.13 billion for the quarter, but fell short of analyst expectations of $9.17 billion, LSEG said.

Salesforce now expects second-quarter adjusted earnings per share of $2.34 to $2.36 on revenue of $9.2 billion to $9.25 billion. Analysts surveyed by LSEG were expecting adjusted earnings per share of $2.40 on revenue of $9.37 billion.

Citi analysts said broader macroeconomic challenges “reemerged with force” in Salesforce’s first quarter. They noted that while the period was also weak for other software companies, execution issues and changes to Salesforce’s go-to-market strategy also impacted the company’s results.

Analysts lowered their price target on the stock from $323 to $260.

“Slowing growth, lack of de-risking visibility and more active M&A have us on the sidelines waiting for improving growth or further evidence of data cloud/GenAI momentum/monetization,” Citi analysts wrote in a note on Thursday.

Other companies were more optimistic.

Goldman Sachs analysts reiterated their buy recommendation on Salesforce shares, saying they view the company as a “high-quality software franchise.” The analysts added that while the company needs to regain investor confidence, they believe easing interest rates, the end of the election cycle and the rise of artificial intelligence will be catalysts for growth.

Goldman Sachs analysts said in a Wednesday note that Salesforce is an “undervalued Gen-AI winner,” and they see room for “significant margin expansion,” the note said.

Morgan Stanley analysts said Salesforce’s results “cause some confidence” in the company’s growth, but they believe the company will benefit from generative AI, especially next year.

Analysts maintained their overweight rating on the stock.

“The disappointing quarter is likely to weaken investor confidence in a near-term growth recovery, but evidence suggests the impact is more cyclical than secular,” they wrote in a Thursday note.

—CNBC’s Michael Bloom and Jordan Novett contributed to this report.