Workday stock price continued its strong downward trend in the past few months, reaching a low of $180, its lowest level since May 2023. WDAY plunged by 40%from its highest level in February 2024. This article explores some of the top reasons why the stock has crashed and whether it is a good buy.
Why Workday stock has crashed
Workday stock has been in a strong downward trend in the past few months, mirroring the performance of other software companies like Adobe, ServiceNow, Intuit, Atlassian, and Box.
The ongoing crash is mostly because of the fear that Workday and other software companies will be disrupted by tools made by companies in the artificial intelligence (AI) industry, like Anthropic and OpenAI.
Additionally, investors are concerned that the AI tools they have developed will take time to become popular and start generating substantial sums of money over time.
Workday has launched its AI tools, including the Agent System of Record and other AI agents. It has also incorporated AI features across all its products. Still, analysts believe that the revenue and profitability growth from these services will take time.
Additionally, the Workday stock has plunged because of the ongoing valuation reset since it was once one of the most highly valued companies in the US. The average price-to-earnings ratio in the last five years was 50, much higher than the S&P 500 average of 22.
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Workday revenue growth is decelerating
The Workday stock price has crashed because analysts expect that its revenue growth will decelerate over time. Data shows that its revenue grew by 20% in 2024, followed by 16.78% and 16.35% in the next two consecutive years.
The most recent results showed that Workday’s revenue rose by 12% in the third quarter to $2.43 billion, with its subscription revenue hitting $2.24 billion. Its free cash flow rose by 53% to $549 million.
Wall Street analysts believe that Workday’s revenue growth will continue to decelerate in the coming years. The average estimate for the annual revenue in 2025 is $9.57 billion, up by 13% YoY. Analysts also expect the numbers to show that the revenue will jump by 12.3% this year to $10.75 billion.
Still, there are some reasons to remain optimistic about Workday as its stock crashes. First, the current stock price is 50% below the consensus average among 39 analysts. These investors believe that the stock will continue growing in the coming months.
Second, most of the solutions will be hard to disrupt by artificial intelligence. This means that its business will likely continue doing well over time.
Third, the ongoing WDAY stock crash has led to significantly lower valuation metrics. For example, the forward price-to-earnings ratio has dropped to 20, lower than the sector median of 24 and its five-year average of 50.
Workday stock price technical analysis
The weekly chart shows that the WDAY stock price has crashed in the past few months. This crash happened after the stock formed a descending triangle pattern whose lower side was at $205. The upper side connected the highest swings since December 2024.
It has now plunged below all moving averages and the lower side of the triangle pattern. It moved below the 61.8% Fibonacci Retracement level and the Ultimate Support level of the Murrey Math Lines tool.
Therefore, the stock will likely continue falling, potentially to $150 and then rebound later this year.
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