"The Big Short" investor Michael Burry has expressed skepticism on the stock price movement of $Salesforce (CRM.US)$ following the company's plans to reduce its current workforce by 10%.
"CRM should have been down 25% on those job cuts. Job cuts are so not the reason to own that," Burry tweeted.
Salesforce reportedly plans to close down select offices in order to help manage costs and expects the restructuring to lead to charges between $1.4 billion and $2.1 billion.
The company's stock price closed 3.57% higher on Wednesday in the wake of the announcement. Although workforce reduction is negative news that hurts employment and livelihood, Wall Street often considers such developments as a positive for the balance sheet, which explains the rise in stock price.
Burry's reference to what should have been the ideal direction of the stock price movement is a reflection of this irony.
Management Statement: "The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions," Salesforce co-Chief Executive Officer Marc Benioff said in a letter to employees, according to Reuters.
As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we're now facing, and I take responsibility for that."
- he said.
Salesforce stock has lost over 38% in last one year owing to consecutive quarters of slowing growth, according to Reuters.