The Workday share price has continued to fall in recent months. It reached a new low at $180, the lowest since May 2023. WDAY fell by 40% from its peak in February 2024. This article examines the reasons for the crash of WDAY and whether the stock is still a great buy.
The Workday Stock Crash
The Workday Stock has seen a significant decline in recent months. This trend is similar to that of software giants like Adobe, ServiceNow Intuit Atlassian and Box.
This crash has been caused by the fears that Workday, and other software firms will be affected by artificial intelligence tools from companies like Anthropic or OpenAI.
Investors are also concerned about the time it will take for their AI tools to gain popularity and generate substantial amounts of money.
Workday launched their AI tools including the Agent System of Record, and other AI Agents. The company has integrated AI into all of its products. Analysts believe, however, that it will be some time before these services generate a significant increase in revenue.
Workday’s stock price has also plummeted due to the constant valuation reset, as it used to be one of the highest valued US companies. In the past five years, the average ratio of price to earnings was much higher (50) than that of the S&P500 average (22).
Read more: Is it safe to purchase the stock dip when Intuit’s price is oversold?
The growth of workday revenues is slowing down
Analysts expect revenue growth to slow down over time. The data shows its revenue will grow by 20 percent in 2024. This is followed by 16,78%, and then 16.35% for the two following years.
Workday reported that its revenue grew by 12% to $2.43 Billion in the third-quarter, and subscription revenues reached $2.24 Billion. The company’s cash flow increased by 53%, to $549 millions.
Wall Street analysts predict that Workday revenue will slow down in the next few years. Analysts estimate that the average annual revenue for 2025 will be $9.57 Billion, an increase of 13% year-on-year. Analysts expect that revenue for this year will also increase by 12.3% to $10.75 Billion.
Despite the stock’s crash, Workday still has some positive aspects. The current price of the stock is 50 percent below the average consensus among 39 analysts. Investors believe the stock price will rise in the next few months.
Artificial intelligence will have a hard time disrupting most solutions. It is likely that the business will continue to do well in the future.
The ongoing crash of WDAY has resulted in significantly lower metrics for valuation. The forward price to earnings ratio, for example, has fallen below the median sector value of 24 as well as its average five-year level of 50.
Technical analysis of the Workday Stock Price
Source: TradingView
Weekly chart of WDAY shows the stock has dropped in recent months. The crash occurred after the WDAY stock price formed a triangle pattern with a lower side of $205. Upper side of the triangle connected to highest swings in December 2024.
Now it has plunged beneath all the moving averages, and below the lower part of the triangle. The tool moved down below both the Ultimate Support Level of Murrey Math Lines and the Fibonacci Retracement at 61.8%.
The stock is likely to continue dropping, possibly reaching $150, and then rise later in the year.
Is it safe to purchase Workday at a discount? This post may change as new information becomes available
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