Larry Ellison, the co-founder of Oracle, experienced a significant drop in his net worth recently, losing around $24 billion. This decrease was primarily due to a notable decline in Oracle’s stock price, despite the company’s promising revenue growth forecasts.
Impact of Oracle’s Stock Decline on Larry Ellison
On a challenging day for Oracle, shares fell approximately 7%, touching about $291 by Friday afternoon. This drop marks one of the largest stock plunges for the company this year.
Promising Revenue Growth Forecasts
- Oracle’s executives, including Ellison and CEO Clay Magouyrk, provided an optimistic projection for revenue growth.
- The company anticipates an average annual growth rate of 31% over the next five years.
- Projected sales are expected to reach $225 billion by fiscal year 2030.
- Estimated earnings per share are projected to climb to $21 by fiscal year 2030.
Analysts received these forecasts positively. Barclays analyst Raimo Lenschow noted that Oracle’s estimates exceeded Wall Street expectations. Similarly, Guggenheim’s John DiFucci remarked that the growth potential was “much higher than some have speculated.”
Key Observations from Analysts
Despite the strong revenue growth outlook, uncertainties surrounded Oracle’s capital expenditure plans during the analysts’ call. Jefferies analyst Brent Thill pointed out the lack of clear forward-looking commentary, suggesting that guidance on expenditures must align with Oracle’s growth in cloud infrastructure revenue.
Ellison’s Current Financial Standing
Larry Ellison retains about 41% equity in Oracle. Following the stock decline, his net worth is now estimated at $350.6 billion, marking a 6.3% decrease. This drop positions him as the second-wealthiest individual globally, trailing Elon Musk, whose net worth approaches $485.9 billion.
Future Stock Price Expectations
While some analysts expressed concerns over capital expenditures, there remains a positive outlook for Oracle’s stock price. Thill has raised his price target to $400 from an earlier $360. Other analysts, including DiFucci and Lenschow, have also increased their targets to $400, reflecting a strong bullish sentiment.
Oracle’s Recent Business Growth
Oracle has seen its stock price surge recently, largely driven by rising demand for cloud computing and AI technologies. The company has projected its cloud infrastructure revenue to grow from $18 billion this fiscal year, nearing $32 billion by 2027, and reaching up to $144 billion over the next three years.
Additionally, Oracle reported a staggering 359% increase in contracted revenue, totaling $455 billion. This was fueled by securing four multibillion-dollar contracts in the last quarter.
Analysts were genuinely surprised by these forecasts, with Deutsche Bank’s Brad Zelnick indicating that the executives’ revelations shocked many positively, highlighting a considerable shift in the computing landscape.
