MSFT Stock Shares Drop After Wall Street Analyst Downgrades Stock
Microsoft shares fell sharply on Thursday after a Wall Street analyst downgraded the stock, citing concerns about its growth prospects.
Jeffrey Loo, an analyst at Credit Suisse, downgraded the MSFT stock from “neutral“ to “underperform,” citing the company‘s “lack of meaningful growth opportunities“ in the near term. Loo noted that Microsoft‘s revenue growth has slowed in recent quarters, with the company expecting sales to remain flat for its current fiscal year.
The downgrade also comes as Microsoft prepares to report its fourth–quarter earnings on Friday. Analysts expect the company to post revenue of $33.4 billion and earnings of $1.07 per share.
MSFT stock was down more than 3% in early trading on Thursday, and the stock was on track for its biggest one–day drop in more than a year.
Loo said Microsoft‘s cloud business, which accounts for a majority of its revenue, is expected to remain strong but noted that the company‘s other businesses, such as its consumer division, have been underperforming.
The downgrade comes as Microsoft faces increasing competition from rival tech giants such as Amazon (AMZN:NSD) and Google (GOOGL:NSD). The company has also been struggling to keep up with the rapid pace of innovation in the tech industry.
Microsoft shares have been underperforming the broader market in recent months, falling more than 10% since the start of the year. The company is now trading at its lowest level since June of last year.
What Does the Future Hold?
Microsoft (MSFT:NSD) has been an industry leader in technology and software development for decades, and MSFT stock has risen significantly in recent years.
However, some analysts are now predicting a massive slowdown in the company’s growth in the near future. The main reason for this downturn is the recent announcement that Microsoft is cutting its workforce by 7,800 employees.
This move is expected to cost the company an estimated $1.5 billion dollars in severance payments, which could affect Microsoft’s bottom line in the short term. Additionally, Microsoft has recently announced plans to reduce its spending on research and development, which could hurt its competitive edge in the long run.
These changes have led to mixed reactions from analysts, and MSFT stock price has already suffered as a result. MSFT stock is down 2.17% from its peak value, and some analysts are predicting even more losses in the near future.
As such, investors should be aware of the risks associated with investing in Microsoft and should consider diversifying their portfolios to minimize potential losses.