Ask Approyo: Will SAP Recover?
As of late, there has been more and more concern surrounding SAP and its future. Back in October, it was reported that SAP stocks dropped by 31%, the lowest it has been in years. While this may be concerning for shareholders, people must understand that the cloud computing business has seen a major shift due to the Covid-19 pandemic. SAP has been affected by this as well as many other companies throughout all industries.
While SAP's stock dropped 31% from February 19th to March 23rd, this is not their all time low. SAP's stock declined by 46% during the 2008 recession, and bounced back over a years' time. It is predicted that SAP will recover back to the $139 level, or surpass this.
While SAP reported that it has experienced a 4% decrease in revenue at the end of Q3 compared to last year, it also reported its cloud revenue increased 11%. Since then, SAP has updated their 2025 trajectory. By 2025, SAP predicts they will reach more than more than "€22 billion in non-IFRS cloud revenue, more than €36 billion non-IFRS total revenue, more than €11.5 billion non-IFRS operating profit, and a significant expansion of the Company’s more predictable revenue share to approximately 85%."
So is SAP still valuable? The answer is yes. There is nothing to worry about here. SAP will recover just as they have in the past. In a covid free world, this drop in shares would not have happened in the first place. Due to COVID, many companies halted their plans and began focusing on only the essentials, leaving their cloud migrations and upgrades to wait until they are in a place of financial stability. This is what caused the drop in revenue.
All in all, the applications will be just fine. Customers will find the same powerful benefits, and SAP will continue to help businesses drive their digital transformation strategies, which in turn will improve the economy throughout the Covid-19 pandemic. Existing SAP customers will eventually move to the cloud as COVID begins to diminish, and with that, revenues will rise back to what they once were within the next year or two. Regardless of the change in stock value, SAP's applications and large partner base are what have made it so successful in the past, which will continue to drive its success in the future as well.
Approyo CEO Chris Carter is confident in SAP's future success, and offers you to reach out with any questions or concerns you may have.