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- “Big Short” investor Michael Burry is surprised Salesforce stock didn’t drop on job cut news.
- “CRM should have been down 25% on those job cuts. Job cuts are so not the reason to own that,” he tweeted.
- Salesforce announced labor force cuts on Wednesday and saw its stock climb 3.6%.
“Big Short” investor Michael Burry thinks Salesforce stock should have seen a steep decline after announcing job cuts on Wednesday.
“CRM should have been down 25% on those job cuts. Job cuts are so not the reason to own that,” Burry tweeted.
Salesforce stock rose 3.6% after the announced cut to its labor force on Wednesday. Shares slipped 2% on Thursday and has tumbled more than 40% from a year ago.
The Scion Asset Management founder, whose billion-dollar bet against the housing bubble was immortalized in the book and the movie “The Big Short,” has been warning of an overall stock market crash and a looming recession.
Meanwhile, Salesforce will trim its workforce by 10% in an effort to strengthen profit margins. CEO Marc Benioff told employees in a letter that Salesforce had been to aggressive with hiring during the pandemic.
“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” he wrote, adding that “the market doesn’t fully appreciate how committed we are to growth and margins.”
The enterprise software giant had about 80,000 employees worldwide as of October 31, up from more than 49,000 on January 31, 2020.
Salesforce is the latest tech company to employ major cost cutting efforts in response to a decline in demand and a more challenging macroeconomic environment.
Facebook parent Meta has said it will cut 13% of its staff, Twitter plans a 50% reduction, Snap has announced a 20% cut, and most recently Amazon said it would slash payroll by more than 18,000.
But Wedbush analyst Dan Ives wrote on Thursday that cuts at Salesforce and Amazon represent the first necessary step in staging a turnaround for the technology sector, doubling down on his call that it could deliver 20% returns in 2023.