Elliott Management Takes Stake in Salesforce

Hedge fund Elliott Investment Management has taken a substantial activist stake in Salesforce Inc. This move comes after layoffs and a deep stock swoon at the enterprise software giant.
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Elliott Management, which is known for pushing for strategic changes and seeking board representation, has taken a multibillion-dollar stake in the company, according to a person familiar with the matter. The San Francisco company had a market capitalization of $151 billion at Friday’s close, down from a peak of more than $300 billion in 2021.
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"We have followed Salesforce for nearly two decades and have developed a deep respect for Marc Benioff and what he has built," said Jesse Cohn, managing partner at Elliott in a statement. "We believe that Salesforce is a preeminent software company and believe that it is worthy of a valuation that reflects its stature."
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Benioff is the chairman and co-chief executive officer of Salesforce. Elliott Management Corporation, an American investment firm, has announced that it has made a significant investment in Salesforce. The details of the investment have not been disclosed. Salesforce has declined to comment.
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Salesforce shares rose sharply in pre-market trading on Monday, climbing as much as 4.1%. The stock's strong performance came as investors bet on the company's continued growth in the cloud computing market.
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Paul Singer's Elliott Management Corporation had a record year in 2020, bringing in $13 billion in profits. This marks a significant increase from the $5 billion the firm made in 2019. Elliott is one of the world's largest hedge fund managers, and its success is a testament to Singer's investment acumen.
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Elliott Management Corporation, which has been involved in pushing for changes at tech companies ranging from Paypal Holdings Inc. to Western Digital Corp., is the second prominent activist investor in recent months to get into the stock of Pinterest Inc. In October, Starboard Value LP took a stake in the company and said the company had issues translating growth into profitability.
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Salesforce announced earlier this month that it would be cutting approximately 10% of its workforce and reducing its real estate holdings. This comes after the company hired too many people during the Covid pandemic as demand surged. Salesforce had about 80,000 employees at the time of the announcement and stated that it was adjusting to more cautious spending by customers.
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Salesforce has seen a dramatic increase in its workforce over the past four years, thanks in part to its aggressive acquisition strategy. The company has bought dozens of businesses in that time, including Slack in 2021 for $27.7 billion. From January 2020 to the end of October last year, Salesforce's headcount grew by more than 30,000.
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Anurag Rana, an analyst at Bloomberg Intelligence, said that Elliott Management's move is not surprising. "Salesforce's valuation has plummeted since it announced the acquisition of Slack, and since then we have seen a slowdown in sales and multiple executive departures," Rana said.
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Bret Taylor, who was Salesforce's co-CEO, said last year that he would leave the company to return to entrepreneurial activities. Taylor was seen as the obvious choice if Benioff ever stepped aside at Salesforce.
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"Elliott's involvement could help management focus both on organic sales growth and margin expansion," Rana added. "We wouldn't be surprised if there was a change at the top also, similar to what Microsoft went through back in 2013."