Shares of cloud computing giant Salesforce (NYSE:CRM) stock are up 2% today on news that activist investor Elliott Management has built a billion-dollar stake in the company and is pushing for change.
It is not clear exactly how much money Elliott Management has invested in Salesforce or the change it wants to see made at the San Francisco-based company. However, Elliott Management, a New York-based investment management firm, has a history of taking activist stakes in leading technology companies. Elliott Management recently won a board seat at Pinterest (NYSE:PINS) when that company appointed Elliott portfolio manager Marc Steinberg as a director.
CRM stock is down 30% over the past 12 months and currently trades at $154 a share.
The Wall Street Journal was the first publication to report news of Elliott Management’s stake in Salesforce. In subsequent media articles, Jesse Cohn, managing partner at Elliott Management, said, “We look forward to working constructively with Salesforce to realize the value befitting a company of its stature.”
Cohn, who has served on the boards of several technology companies, including Twitter and eBay (NASDAQ:EBAY), added that Salesforce is “one of the preeminent software companies in the world.” Salesforce has not publicly commented on Elliott Management targeting the company for activist intervention.
Why It Matters
Elliot Management’s new stake in Salesforce comes at a time of change for the cloud computing software company. Earlier this month, Salesforce announced that it is cutting 10% of its global workforce and will close several offices as it prepares for an economic downturn. Salesforce is currently valued at just over $150 billion.
At the end of November last year, Salesforce announced that co-CEO Bret Taylor was stepping down and leaving the company. Taylor’s last day at Salesforce will be on Jan. 31 of this year. The company has been struggling since its $27 billion acquisition of instant messaging platform Slack, which was announced in 2020. In December of last year, Slack co-founder and CEO Stewart Butterfield announced he is leaving that company.
What’s Next for CRM Stock
Can Elliott Management cause positive change at Salesforce? Time will tell. But judging by the fact that CRM stock is rising today, investors seem to approve of the investment management firm’s involvement with Salesforce, which continues to be led by co-founder Marc Benioff. While not always successful, activist investors can help to turn companies around and have positive benefits for shareholders.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.