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Shares of Salesforce (CRM 3.06%) rose on Monday, following reports that Elliott Management had made a sizable investment in the cloud software leader. As of 1:30 p.m. ET, Salesforce’s stock price was up more than 3%.
Elliott purchased a multibillion-dollar stake in Salesforce, according to the Wall Street Journal.
“Salesforce is one of the pre-eminent software companies in the world, and having followed the company for nearly two decades, we have developed a deep respect for Marc Benioff and what he has built,” Elliott managing partner Jesse Cohn told the Journal. “We look forward to working constructively with Salesforce to realize the value befitting a company of its stature.”
With roughly $55 billion in assets under management, Elliott is a powerful and respected force in the activist arena. It’s known for pressuring management teams to enact changes that improve the profitability of the companies it invests in.
Salesforce’s stock soared during the early stages of the pandemic when businesses spent heavily on cloud services to support their remote workers. But in recent months, inflation concerns and fears of a potential recession have driven companies to pull back on their tech spending. Salesforce’s sales growth, in turn, has slowed, and its share price fell sharply last year.
In response to these challenges, the software company said it would cut 10% of its workforce and prioritize other initiatives that could help expand its operating margin.
Elliott apparently believes there’s more work to be done. It will be interesting to see what changes the activist investor will push for in the coming days.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Salesforce. The Motley Fool has a disclosure policy.
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