Cramer Says This Software Giant Is Fighting a Takeover With a $4 Billion Buyback

Workday (NASDAQ:WDAY | WDAY Price Prediction) stock still carries a takeover premium from reported Silver Lake acquisition talks, and the company’s own recent moves read like a business arguing it doesn’t need a buyer. Workday authorized a $4 billion open-ended repurchase on August 27, scheduled its annual financial analyst day for October 13, and issued a release claiming it now signs a new state or local government customer nearly every week. All three landed inside two weeks of the deal chatter.

Mad Money host Jim Cramer flagged the tension on air, first the night the Silver Lake report hit and Workday stock jumped 18%, and again in late August after the buyback disclosure. Cramer’s read, paraphrased, is that Workday is fighting a takeover with capital return, and the split between the deal premium and the underlying trajectory is what investors have to price right now.

The scoreboard tells that story starkly. Workday stock is up 24% over the past month, down 13% over one year, and down 26% over five years. Today, Workday stock is up 0.7% to $199.77 midday.

For context, over the past year, Salesforce (NYSE:CRM) stock is up 1.33% and ServiceNow (NYSE:NOW) stock is down 25%, while the iShares Expanded Tech-Software Sector ETF (CBOE:IGV) is down 4%. As for WDAY stock, anyone who bought the takeover pop owns a business worth less than a year ago and considerably less than five years ago, while betting on a transaction the company’s own conduct is arguing against.

Cramer’s Read on the Buyback

The new authorization sits on top of a previously announced $5 billion program that Workday completed six months ahead of its target. Management framed buybacks as a permanent part of capital allocation and reported $1.3 billion of repurchases during the quarter alone. Stacking a $4 billion open-ended authorization on top of a program it just retired early is the move of a company positioning to stay independent, not one negotiating its own sale.

The analyst day compounds that signal. Booking a full day of forward strategy discussion signals management expects to be running the business publicly on that date, and the buyback size gives capital-return support to holders who stay independent alongside the company. TD Cowen raised its price target on Workday stock to $220 while maintaining a Hold rating, a combination that itself communicates how far the standalone story stretches.

What the Government Book Really Buys

Workday’s public-sector release names concrete wins. New customers include the State of Delaware, the Commonwealth of Massachusetts, New Jersey Transit Authority, Bexar County, the New York State Unified Court System, and the Utah Transit Authority. Recent go-lives include the City of Akron, the State of Georgia, the City of San Mateo, and Sandy City.

Workday says more than 100 state and local government entities have selected the platform in the past two years, and the Georgia deployment covers more than 200 agencies and over 70,000 employees in roughly 30 months. Government contracts are durable and slow, which is a real strength and the reason they won’t reprice a stock quickly. The book strengthens the standalone case without moving the near-term tape, and it also frames what a private-equity owner would inherit if a deal did close.

Standalone Verdict

The five-year return is the hardest fact for the standalone case to answer. A window that long isolates execution rather than sentiment, and Workday stock down 27% over five years says the platform hasn’t converted its scale into shareholder returns without help from a deal narrative. The buyback supports the share count, and growth still has to come from the platform itself.

At current levels, the WDAY stock price isn’t fully supportable on the standalone book yet. Workday’s government pipeline and the buyback anchor a floor. However, the takeover premium is what pulled the stock 24% higher in a month, and if the Silver Lake talks go nowhere, exposure here is to a stock that has already given back a year of gains and half a decade of compounding, holding its bounce on deal hope rather than results.

Position sizing should reflect that. Investors treating Workday as a durable enterprise-software holding may want to size it for the underlying business alone and treat any deal-related upside as optionality rather than a plan. Anyone who chased the mid-August pop should cap the position at a size that can survive a headline saying the talks ended, because that outcome is a live risk and the five-year chart is the clearer read on what supports the shares without one.

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