Informatica Stock Sank Today Due to Disrupted Acquisition Negotiations

Why Informatica Stock Sank Today

Salesforce isn't going to buy the company. Shares of Informatica (NYSE: INFA) sank on Monday after the company confirmed that Salesforce won't be acquiring it. As of 1:30 p.m. ET, Informatica stock was down about 9%.

Did a deal with modest upside fall apart?

Informatica stock took a hit earlier in the month after an article from The Wall Street Journal said that Salesforce was looking to acquire the cloud-based data management company for less than its stock price at the time. However, Informatica released a statement today saying that it's "not engaged in acquisition discussions."

Informatica says it's not involved in talks to be acquired, at least not right now. One would intuitively think this would reverse its drop from earlier in the month when the rumor first came out.

Informatica stock is down nevertheless likely due to unanswered questions. The discussions with Salesforce were reportedly real but simply broke down over price. And commentary from Informatica's management leaves this possibility open.

Therefore, it's possible that Informatica's management would have sold the company at a slightly higher price than where it trades now, but Salesforce was unwilling. That possibility doesn't exactly inspire confidence for the long term and may explain the stock's drop today.

Expect modest growth this quarter

While shooting down the acquisition rumors, Informatica's management took the opportunity to update investors on its current quarter. For the first quarter of 2024, the company expects to be on the higher end of its previous guidance, which is good. But even hitting the higher end of guidance only represents about 6% year-over-year growth, which isn't necessarily exciting.

Informatica is scheduled to report finalized Q1 financial results on May 1.Should you invest $1,000 in Informatica right now?

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