Shares of Salesforce rallied Friday as Wall Street bets that activist pressure may again help revive an otherwise dragging stock. Jeff Smith’s Starboard Value increased its stake in Salesforce by 47% during the second quarter, according to a securities filing , ending the month of June with a position worth $341.5 million. Starboard also added to its Salesforce holdings in the first quarter. The market is taking note Friday, sending shares up 4%, because Starboard was the first activist hedge fund to start publicly pushing for changes at Salesforce in late 2022 and into 2023. Multiple other activist firms swarmed around Salesforce and echoed Starboard’s calls for greater efficiency and profitability, among other demands. It proved to be a wildly successful activist campaign, with shares of Salesforce almost doubling in 2023 after losing nearly half their value in 2022. Starboard had sold down a large chunk of its stake before beginning to buy this year. Starboard’s increased stake in Salesforce could once more positively influence the company’s direction, according to D.A. Davidson analysts led by Gil Luria. “We believe this is a signal there will be another round of investor activism and increased pressure on management to refocus on growth of the core business, additional margin expansion, and hold off on dilutive M & A,” Luria wrote to clients Friday. In the same note, D.A. Davidson upgraded the stock to a hold-equivalent rating from sell, arguing the company’s challenges have been appropriately priced in. Indeed, Salesforce entered Friday having lost more than a third of its value after closing at a record of $368 a share on Dec. 4. CRM 1Y mountain Salesforce’s stock performance over the past 12 months. Among Salesforce’s issues is a belief that artificial intelligence is threatening the business model of enterprise software companies that count on their customers growing their headcount, thereby paying for more software licenses. It’s often called the seat-based model, and earlier this week, its perceived shortcomings in the generative AI era was the subject of a note from Melius Research. There is “some truth” to Melius Research’s idea that AI is eating software, Jim Cramer acknowledged during the August Monthly Meeting on Thursday. At the same time, the Club hasn’t been ready to cut bait on its long-held position in the stock. Starboard’s intentions this time around aren’t clear — the firm didn’t respond to CNBC’s request for comment — but its maneuvering nevertheless represents a glimmer of hope. In October 2024, Smith of Starboard complimented Salesforce’s profitability improvements but said he still believed “there’s a lot more to go.” “If they execute on this plan, the stock could turn around in the same way it did last time Starboard helped CRM steer the ship,” D.A. Davidson’s Luria wrote to CNBC in an email Friday. Luria kept his price target unchanged at $225 a share, which is below where the stock is trading Friday. Luria…
Read More: Is the activist heat on Salesforce ramping back up? The market sure thinks