(Reuters) – Shares of Salesforce Inc sank more than 7% before the bell on Thursday after co-CEO Bret Taylor’s sudden exit caught Wall Street off guard and raised concerns about the merit in having two leaders.
His departure after just a year in the role coincides with slowing revenue growth at the software company as it faces stiff competition from the likes of Microsoft, a stronger dollar and businesses cutting spending amid red-hot inflation.
At least 17 brokerages slashed their price targets on the stock, with the steepest cut coming from J.P. Morgan analysts who lowered their target by $45 to $200.
Jefferies analysts said the surprise exit indicated that the “co-CEO model is not working with two departures in three years.”
Taylor, a tech veteran who has worked at Facebook parent Meta Platforms as technology chief and served as Twitter Inc’s chairman, departs San Francisco-based Salesforce after six years, leaving co-founder Marc Benioff as top boss.
Benioff tapped Taylor as co-CEO in 2021, to replace Oracle executive Keith Block who stepped down from the role just before the pandemic began.
Taylor was involved with Salesforce’s software which helps businesses effectively manage customer interaction, and was a key driving force behind the company’s $27.7 billion takeover of workspace messaging platform Slack Technologies.
He was previously chief operating officer and chief product officer of the company.
“We view this leadership change as a significant blow given his leadership role on product,” Needham analysts said in a note.
Shares of the company, which have lost about 37% so far this year, ended 5.7% higher on Wednesday before Salesforce’s third-quarter earnings report.
(Reporting by Eva Mathews in Bengaluru; Editing by Devika Syamnath)
