Shares of Salesforce (NYSE: CRM) were trading lower on Thursday. The company's stock lost 4.5% as of 3:30 p.m. ET but was down as much as 5.4% earlier in the day. The move down comes as the S&P 500 gained 0.1% and the Nasdaq composite gained 0.2% on the day.
Salesforce stock took a hit after the sales software giant announced on Wednesday evening that longtime President and COO, Brian Millham, would be retiring.
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Change in leadership
Brian Millham was with Salesforce for 25 years. Stepping into a newly created role to replace Mr. Millham, Robin Washington will become chief operating and financial officer (COFO). The move comes as the company attempts to accelerate its AI-focused strategy. According to the press release, Washington will help "lead Salesforce's next phase of transformation -- driving profitable growth, operational excellence, and financial strategy."
While Washington is seasoned, the departure of such an integral executive as Millham as well as skepticism around the double-duty nature of the newly created position made some investors wary. https://www.investing.com/news/stock market-news/salesforce-stock-falls-amid-skepticism-over-new-cofo-role-93CH-3854270
What's next for Salesforce
Salesforce is in the midst of attempting to drive efficiency and boost value through an AI overhaul. The company's sales and earnings growth have lagged much of the tech industry over the last few years. Despite this, the company carries a high price-to-earnings (P/E) ratio of 54. How the company's AI gambit will pay off remains to be seen. While it could help the company expand its margins, there is still too much uncertainty given its current valuation. There are better places to invest.
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Johnny Rice 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
