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SAP shares plunge to biggest intraday slump since 1999, wiping $35bn off its value

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·Germany Correspondent, Yahoo Finance UK
·2-min read
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Watch: SAP CFO sees `challenging' demand environment until mid-2021

German software giant SAP (SAP.DE) revised its outlook downwards on Sunday evening, causing its shares to plunge by almost 21% in early trading on Monday morning, wiping about $35bn (£27bn, €29.6bn) off its value.

SAP said that for 2020 it now expects revenue in the range of €27.2bn (£24.7bn, $34.2bn) to €27.8bn, down from a previous forecast for between €27.8bn to €28.5bn, as the uptick in demand has been more restrained than it had expected.

The company said in a statement that it its previous forecast was based on the assumption that lockdowns would ease and economies would open again, but “lockdowns have been recently re-introduced in some regions and demand recovery has been more muted than expected.”

SAP headquarters in Walldorf, Germany. Photo: Ralph Orlowski/Reuters
SAP headquarters in Walldorf, Germany. Photo: Ralph Orlowski/Reuters

SAP said that sales will only recover cautiously in the next two years and that the pandemic, will "probably have a negative impact until at least the first half of 2021.”

Third-quarter sales fell 4% to €6.5bn, but were buoyed by SAP’s cloud-computing business, which saw 11% growth. It said revenue from its cloud business is expected to triple to €22bn by 2025.

SAP said that adjusted operating profit for 2020 is expected to be between €8.1bn and €8.5bn, this year. In 2019, it was €8.2bn.

SAP Stock price 26 October 2020
SAP Stock price on 26 October. Chart: Yahoo Finance

Monday’s SAP share price drop was the biggest intraday slump since 1999. The software companies shares had hit an all-time high of around €142 in September.

The company also said it was pressing ahead with the US listing of its Qualtrics enterprise software unit, which it bought less than two years ago for $8bn.

Watch: Virus fears sink European stocks

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