Topline
Larry Ellison, the world’s second-richest person, had roughly $24 billion cut from his net worth as shares of his Oracle tumbled on Friday, despite executives providing revenue growth forecasts that were applauded by Wall Street.
Oracle’s chairman challenged Elon Musk for the world’s richest title following a record-breaking rally last month.
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Key Facts
Shares of Oracle dropped about 7% to around $291 by Friday afternoon, pacing what would be the stock’s second-largest plunge this year.
Oracle executives, including Ellison and CEO Clay Magouyrk, among others, spoke with analysts late Thursday and forecasted revenue to grow at an average of 31% annually over the next five years, with sales expected to hit $225 billion by fiscal year 2030.
Executives said earnings are projected to increase to $21 per share by fiscal year 2030, an average of 28% annual growth.
The forecasts were celebrated among economists: Barclays analyst Raimo Lenschow wrote the estimates pulled ahead of Wall Street’s projections, while Guggenheim’s John DiFucci said growth estimates were “much higher than some have speculated.”
A stock slide could be attributed to Oracle executives failing to provide additional details about capital expenditure plans, Jefferies analyst Brent Thill wrote Thursday, noting there was “no-forward-looking commentary” on expenditures and that estimates would need to “ramp” in line with Oracle’s cloud infrastructure revenue growth.
Forbes Valuation
Ellison, who holds about 41% equity in Oracle, remains the second-wealthiest person in the world with a fortune estimated at $350.6 billion. The stock decline dropped about $24.1 billion from Ellison’s net worth, representing a 6.3% decrease. He trails Elon Musk for the world’s richest title, as the Tesla CEO’s net worth swells toward the $500 billion threshold once again, settling at $485.9 billion as of Friday. Ellison came within the ballpark of Musk’s fortune last month after Oracle shares soared the most since 1992, adding $110 billion to Ellison’s net worth in a single day as the Oracle chairman became the second person to ever eclipse $400 billion.
How High Could Oracle’s Stock Go?
Despite pointing to a lack of answers on Oracle’s capital expenditures, Thill raised his price target for Oracle’s stock to $400 from earlier estimates of $360. DiFucci and Lenschow similarly raised their price targets to $400 from $375 and $367, respectively, maintaining a bullish outlook while Stifel analyst Brad Reback held his $350 price target.
Key Background
Oracle’s stock has accelerated in recent months as the cloud computing giant has forecast significant revenue growth on AI demand. Last month, Oracle projected cloud infrastructure revenue to increase to $18 billion this fiscal year before nearly doubling to $32 billion in 2027, before hitting $73 billion, $114 billion and $144 billion over the following three years. The company also reported a 359% increase in contracted revenue that has yet to be recognized to $455 billion, after Oracle said it reached four multibillion-dollar contracts with three different customers through its latest quarter. Those estimates surprised analysts, including Deutsche Bank’s Brad Zelnick, who wrote that those on a call with Oracle executives at the time were “all kind of in a shock in a very, very good way,” as there was “no better evidence of a seismic shift happening in computing.”
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