Activist investment firm Third Point LLC, managed by prominent investor Dan Loeb, finalized the complete sale of its remaining stake in software company Workday, Inc. (NASDAQ: WDAY) during the third quarter of fiscal year 2025. This move constitutes the hedge fund’s second full exit from the company within the same year, having previously liquidated its holdings earlier in the first quarter. During the more recent transaction in Q3, Third Point sold approximately 300,000 shares, marking an exit of its residual position.
In November, Workday released its financial results for the third quarter, demonstrating an adjusted earnings per share (EPS) of $2.32, which notably exceeded analysts’ expectations of $2.18. Revenue figures also surpassed estimates, with Workday generating $2.43 billion compared to the consensus forecast of $2.41 billion.
As of the end of this period, the company reported a 12-month subscription revenue backlog totaling $8.21 billion, representing a year-over-year increase of 17.6%. This backlog growth was partially bolstered by the acquisition of Paradox, which contributed to enhancing Workday’s subscription revenue base.
The company emphasized sustained momentum within its artificial intelligence (AI) portfolio, alongside ongoing advancements and innovation embedded in its platform offerings, signaling a commitment to technology development and product evolution.
Despite these positive operating results, several financial analysts have recently moderated their price targets for Workday’s stock. Rishi Jaluria, an analyst at RBC Capital, retained an Outperform rating but reduced the price objective from $340 to $320. Jaluria noted that although Workday’s total revenue guidance for the full year was raised beyond the quarterly beat, the company’s organic revenue—excluding acquisitions—would have fallen short of market consensus. Additionally, Workday maintained its guidance for adjusted earnings before interest and taxes (EBIT) margin, which Jaluria commented on as a factor influencing his price target adjustment.
Meanwhile, Jason Celino from KeyBanc also upheld an Overweight rating on the stock but lowered his price target from $285 to $260. Celino observed that revenues from subscriptions and professional services were slightly above consensus estimates. However, the company’s fourth-quarter outlook aligned broadly with expectations, leading to a tempered outlook despite the near-term financial outperformance.
Additional commentary from a Needham analyst highlighted external factors impacting the company’s deal flow, specifically mentioning that "the US federal government shutdown negatively impacted some deals,” which may have affected revenue recognition and contract timing during the quarter.
Citizens JMP Securities remarked on the fiscal 2026 operating margin guidance, where Workday projected a non-GAAP operating margin around 28.5%, slightly below the consensus estimate of 28.7%. The firm suggested this margin figure "may be depressed slightly by the acquisitions,” indicating the impact of integration costs or other acquisition-related expenses on overall profitability.
Examining stock performance, Workday’s shares have declined approximately 21.37% over the past year. This contrasts with an 18.51% increase in the Eagle Capital Select Equity ETF (NYSE: EAGL) and a more modest decline of 7.67% in the Global X Cloud Computing ETF (NASDAQ: CLOU), ETFs that represent broader market segments and similar technology exposures.
Moreover, when comparing company peers, Workday underperformed significantly relative to Palantir Technologies, which achieved impressive growth of 165.32% during the same period. Conversely, SAP SE ADS shares also fell but by a smaller margin of approximately 15.40%. These comparisons suggest varying investor sentiment and market dynamics across the software and cloud computing sector subsectors.
In summary, the complete divestiture of Workday shares by activist investor Third Point LLC marks a notable shift in the ownership landscape of the company. While Workday has reported better-than-expected financial results and continues to develop its AI capabilities, the tempered outlook and cautious analyst revisions highlight some uncertainties regarding its near-term organic growth trajectory and profit margins. Market performance data corroborates the mixed investor sentiment, with Workday’s stock underperforming key benchmarks and comparable companies.