Workday's stock falls as CEO change sounds like 'really bad news' to this analyst

By Hannah Pedone

Investor sentiment toward software stocks is low, and now Workday is replacing a CEO who was known for having good sales relationships

Workday is reinstating a past CEO as it embarks on "one of the most pivotal moments in our history."

A previous version of this story misstated the first name of Workday's former CEO.

Workday has announced that its co-founder and CEO, Carl Eschenbach, is stepping down. And investors aren't happy about it.

The stock (WDAY) fell more than 5% on Monday.

The software company for payroll and human resources said the move comes as the business enters a "next chapter" focused on "leading in the rapidly evolving artificial-intelligence era," according to a press release. Aneel Bhusri, another co-founder and the current executive chair, will replace Eschenbach.

"We're now entering one of the most pivotal moments in our history," Bhusri said in a release. He previously served as Workday's CEO from 2014 to 2020 and was co-CEO from 2020 to 2024.

The transition isn't sitting well on Wall Street, however, with Mizuho trading-desk analyst Jordan Klein calling the changeover "really bad news."

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"Eschenbach was liked and had a solid reputation [for] executing a plan and delivering results," Klein said in a note to clients.

He added that Eschenbach was a "sales leader" and had a "strong presence with customers," which he deemed more important than having a focus on research and development. Eschenbach had been given the CEO role as part of a plan to expand the company's presence beyond human-resources functions like payroll and talent management and into financials and other markets.

Workday's stock has been punished over the last year, falling 44% amid investor anxiety over the software sector's ability to monetize AI.

Evercore ISI analyst Kirk Materne said in a note that, while Bhusri is a familiar face, it will take a lot of "handholding" along with "consistent execution" around the company's AI strategy before investors would warm to the stock again.

See also: Software ate the world. Now, Wall Street is worried AI will eat software.

"Any benefits from a shareholder perspective from this transition are going to take some time," he said.

He did see a silver lining: "If there is a positive for Mr. Bhusri as he retakes the CEO role, it's that sentiment towards Workday is pretty much at an all-time low."

Bhusri will take over as CEO immediately. Eschenbach will continue to support him as an adviser.

-Hannah Pedone

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02-09-26 1632ET