SAP just saw $35 billion wiped off its market cap and it’s on track for its worst trading day in 12 years!

[r2d2]

The company, which slashed its revenue and profit forecast for 2020, saw its market cap fall from 147 billion euros to 118 billion euros and its worst trading day in at least 12 years. SAP said coronavirus lockdowns would affect demand for its business relations and customer management software well into 202. It also announced plans to go all-in on cloud computing, competing with the likes of Oracle and Salesforce.  While customers pay considerable sums upfront for SAP’s on-premise software packages, most of the payments for cloud subscriptions come down the line, SAP said. As a result, the company is abandoning medium-term profitability targets and warned that it will take longer than expected to recover from the pandemic. “As the CEO of SAP, I have to be focused on the long-term value creation of this company,” Chief Executive Christian Klein told CNBC’s “Squawk Box Europe” on Monday.

“So I cannot trade the success of our customers and the significant revenue potential of SAP against short-term margin optimization.” SAP now expects to almost triple its cloud revenues to over 22 billion euros by 2025, Klein said. However, the switch to focus on cloud computing will bring the company’s 2023 operating margin down by approximately 4 to 5 percentage points. “We will stay committed to our profitable growth with over 11.5 billion euros of operating profit in 2025, which includes a double digit profit growth from 2023 onwards,” said Klein.

JPMorgan cut its price target for SAP to 120 from 160 euros, and downgraded the stock to neutral from overweight.

[zarathustra]

Any effect of this on our desi SAP santha? 

[ShruteSastry]

in march they were trading at 94$ now it is $115,

Not that bad compared to others actually.

Probably mid-tier companies didn't pay them yet, since they are at loss too.

[ShruteSastry]

i think its a strategy, so that lots of people will buy now and increase the market cap.

[Pitta]