SAP shares plummet due to disappointing cloud contract figures

• SAP's stock dropped 11%, marking the biggest daily fall since October 2020 when shares plummeted 22% following disappointing Q3 results
• The company's current cloud backlog grew 16% year-over-year to 21.1 billion euros in Q4, below market expectations
• Shares are on track to close at their lowest price level since mid-2024, signaling significant investor concern about cloud business momentum

Market Summary: SAP Shares Plummet on Weak Cloud Performance

Key Developments:

German enterprise software giant SAP experienced its worst single-day decline since October 2020, with shares plunging as much as 11% on Thursday following disappointing fourth-quarter cloud contract results. The stock is tracking toward its lowest closing price since mid-2024.

Critical Figures:

• SAP's current cloud backlog (CCB) grew 16% year-over-year in Q4, reaching €21.1 billion ($21.1 billion equivalent)
• This growth rate fell short of market expectations, triggering the sharp selloff
• The decline represents SAP's steepest drop since October 2020, when shares fell 22% on weak Q3 results

Market Implications:

The weak cloud contract performance raises concerns about SAP's cloud transformation momentum, a critical growth driver for the enterprise software sector. Cloud backlog is a forward-looking indicator of future revenue, making this shortfall particularly troubling for investors banking on continued cloud migration trends.

The magnitude of the selloff reflects heightened investor sensitivity to cloud growth metrics amid an increasingly competitive enterprise software landscape. SAP competes with rivals including Oracle, Microsoft, and Salesforce in the cloud enterprise resource planning (ERP) market.

Sector Context:

This development may signal broader headwinds in enterprise software spending or increased competition in cloud infrastructure services. The disappointing results come as enterprises globally reassess technology spending amid economic uncertainty.

The stock's decline to levels not seen since mid-2024 erases recent gains and may prompt analysts to revise revenue and earnings forecasts for upcoming quarters, potentially affecting broader software sector sentiment.