Tuesday's Headlines: Salesforce Slides Further As Slack CEO Exits

Tuesday's Headlines: Salesforce Slides Further As Slack CEO Exits

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Stitch Fix (SFIX) +6.3%

Huazhu Hotels Group (HTHT) +5.5%

Calavo Growers (CVGW) +2.0%

2U (TWOU) +1.5%

Trip.com Group (TCOM) +1.4%

Moving Down ⬇️

Cloudflare (NET) -10.6%

Snowflake Inc. (SNOW) -9.4%

Farfetch (FTCH) -9.2%

Bill.com (BILL) -9.2%

DocuSign (DOCU) -8.9%

Salesforce Slides Further As Slack CEO Exits 🛝

Just days after it was announced that Salesforce’s (CRM) co-CEO Bret Taylor would be stepping away from the company, news has broken that Stewart Butterfield — the CEO of Slack — is also departing the firm. Slack was purchased by Salesforce last year for $27 billion in its largest acquisition to date. This latest exit has only served to exacerbate the selloff witnessed since Taylor’s departure, with Salesforce experiencing two of its worst days on the market all year in the three trading days following his exodus.

Butterfield made it clear that the reasoning behind his imminent departure is quite different from that of Taylor, who left to “return to [his] entrepreneurial roots.” Butterfield wishes to spend more time with his 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.”

Salesforce is currently down over 47% year-to-date, with a worrying 16% drop since the beginning of December following these two high-profile departures. This, coupled with a break from tradition for the firm when it declined to give guidance for the upcoming year in its recent earnings call, appears to have shareholders relatively spooked.

While the current macro environment certainly hasn't helped Salesforce may have more to worry about than the rest of its tech counterparts if it continues to hemorrhage key members of senior staff.

GitLab Jumps on Narrower Than Expected Losses 🙌

Shares of GitLab are soaring in pre-market trading this morning after a strong showing in last night’s Q3 earnings report. The software development platform is up as much as 20% at time of writing after it managed to post a smaller loss than expected for the quarter.

The company’s non-GAAP net loss per share of $0.10 came in $0.05 below expectations, inciting the rally. It also posted strong revenue figures, with 69% year-over-year growth. For the coming quarter, management expects to take in $119 - $120 million on a non-GAAP net loss per share of $0.14 - $0.15. This guidance was well ahead of Wall Street’s forecast too, providing a pleasant surprise for GitLab investors.

These results are especially impressive considering the macro backdrop and some penny-pinching in the tech sector. CEO Sid Sijbrandij commented on the company’s durability:

“Companies cannot afford to slow down their software innovation. In today's turbulent economic climate, they are turning to solutions like GitLab to reduce costs, drive efficiencies, fuel a fast pace of innovation, and meet customer demands. Our Q3 business results demonstrate GitLab’s value proposition as a mission-critical DevSecOps platform for software innovation is resonating.”

One of the more recent tech IPOs, GitLab has had a torrid time of it on the public markets, down 67% since its late 2021 debut before today’s pop. Its strong growth and retention figures — 130% net dollar retention rate this quarter — are to be admired, however, current market sentiment is much more interested in the bottom line these days and the company is still posting some large losses. Coming in well below expectations for Q3 is a step in the right direction for Gitlab as it hopefully manages to shore up its balance sheet in the coming quarters.

Pepsi Announces Layoffs 😰

Everyone’s second-favorite soda company will be laying off workers in its American snacks and beverage divisions according to documents reviewed by The Wall Street Journal. PepsiCo plans to eliminate hundreds of jobs across the United States in order to “simplify the organization” and ensure it “operates more efficiently”. This is one of the first significant layoffs seen outside the tech and media sectors, reminding investors that harsh economic conditions can be felt across the board.

The majority of the company’s cuts will be concentrated in the beverage business as the snacks division has already been trimmed thanks to a voluntary retirement program. PepsiCo has about 129,000 employees in the U.S.

The memo was striking considering we’ve witnessed increased demand for food and groceries due to the cost of living crisis. Pepsi itself performed well in the last quarter, reporting an increase in sales and profits in the wake of price increases. However, executives announced their intentions to cut expenses to save declining margins as the cost of ingredients, transport, and labor have increased.

Pepsi’s stock is flat in pre-market trading despite the news.