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Why Accenture Stock Tumbled Today


News of a delay in one important activity spooked investors.

Accenture‘s (ACN -4.82%) top news item Tuesday wasn’t all that encouraging and in reaction, investors traded the company’s stock down by more than 4% on the day. The storied consultancy is delaying its annual round of promotions, a move that could affect hundreds, if not thousands, of employees.

Six-month shift

That news initially came from Bloomberg, which wrote in an article published before market open that Accenture aims to delay most of its planned promotions by six months. Citing unidentified “people familiar with the matter,” the article stated that the advancements would be announced next June rather than this coming December — its traditional month for announcing such moves.

An unnamed representative confirmed the change, saying that the shift in timing is permanent. This person added that June provides “better visibility of our clients’ planning and demand.”

According to Bloomberg’s sources, Accenture’s managing directors were initially informed of the change earlier in September. Currently, the sprawling company has roughly 750,000 employees and is active in 120 countries.

A sector struggles

The consultancy business is struggling at the moment, with the root cause being a pull-back in spending by many enterprises. Although economic fears have receded somewhat, they are still an influence, with top managers worried that inflation might persist or the various conflicts overseas could dampen the global economy. When companies are fearful, they tend to rein in spending. And oftentimes, the spending they rein in is of the “non-essential” variety, such as consultancy services.

It’s little wonder, then, that Accenture cut its revenue guidance earlier this year for annual revenue. It now expects maximum growth of 3% in revenue this fiscal year compared to its predecessor. This was down notably from the previous forecast of 5%.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Accenture Plc. The Motley Fool recommends the following options: long January 2025 $290 calls on Accenture Plc and short January 2025 $310 calls on Accenture Plc. The Motley Fool has a disclosure policy.



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