On the day Microsoft announced the eventual exit of its CEO a week ago today, its stock jumped past the $35 mark before settling at $34.75 in normal trading after closing the previous day at $32.39. At one point, Microsoft was worth $18 billion more than it was before Steve Ballmer announced his decision to step down.
But since then, investors have lost their head of steam, and Microsoft has drifted lower. At current trading levels, Microsoft is up a mere 2.4 percent from its pre-Ballmer levels. This indicates that any enthusiasm that Ballmer’s exit engendered among investors was short-lived.
Another perspective on the slip is that the Ballmer jump was more the expectation of a rally leading to that reality, as opposed to mature investor sentiment that the news was good for Microsoft’s long-term prospects. Microsoft has managed a gain in only one trading day this week, and is off over 1 percent in today’s regular trading.
The above matters as it contextualizes commentary written since Ballmer stunned the technology world that he was stepping down, pushing back slightly against the narrative that he alone is responsible for holding the market value of his company back.
The exit of a CEO can lead to a rally in a company’s stock, as Groupon learned when it fired founder and then head exec Andrew Mason. In April, two months after the end of the Mason era, Groupon had risen more than 40 percent. Smaller companies can fluctuate more wildly in the market, certainly, but for Microsoft’s CEO-change-delta to be under 3 percent in just a week indicates that investors are either unenthused by the change, or simply don’t think that it will make a difference. Or both.
Whatever the case, if there will be a Ballmer bump in Microsoft’s stock price due to his exit, it appears that it will only come on the back of improved product and financial performance brought on by his successor, and not his actual departure.
Top Image Credit: Microsoft Sweden
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