Investors who have owned stocks in the past year generally have experienced some decent gains. In fact, the SPDR S&P 500 ETF Trust's (NYSE:SPY) total return in the past 12 months is 10.3%. But there is no question some big-name stocks performed better than others along the way.
Salesforce's Bumpy Ride: One company that has been a disappointing investment in the past year is customer relationship management software leader salesforce.com, inc. (NYSE:CRM).
In the past seven years, Salesforce has been extremely aggressive in ramping up its acquisitions. In 2016 alone, the company completed 12 major acquisitions including a $6.5 billion deal for MuleSoft.
In December 2020, Salesforce went even bigger with a $27.7 billion buyout of Slack Technologies. Slack first went public back in June 2019 at an IPO valuation of around $15.7 billion.
Fortunately for Salesforce investors, the company's business was relatively insulated from COVID-19 pandemic disruptions. If anything, the shift to a remote and hybrid work environment facilitated the demand for customer-related software.
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At the beginning of 2020, Salesforce shares were trading at $163.92. By the beginning of March of that year, the stock was up to around $172 as news of the coronavirus spreading in China prompted concerns about a U.S. pandemic.
Salesforce ultimately bottomed at $115.29 during the pandemic-driven March sell-off. Fortunately for Salesforce investors, the dip didn't last long. By July, Salesforce shares were making new all-time highs above $195, and the stock finished 2020 at around $222.
The stock's steady march higher continued throughout most of 2021, culminating with the stock peaking at $311.75 in November 2021.
Unfortunately, Salesforce's disappointing earnings report in late November spooked investors concerned about the company's slowing revenue growth and elevated valuation.
Salesforce In 2022, Beyond: Since the end of November, fears about slowing revenue growth coupled with a broad market rotation out of high-growth tech stocks have sent Salesforce shares back down to $197.19. But even after its significant pullback from November highs, Salesforce's 40.2 forward earnings multiple suggests the stock isn't particularly cheap at current levels.
Unfortunately, Salesforce investors who bought a year ago and held on have generated a terrible return on their investment. In fact, $1,000 in Salesforce stock purchased on Feb. 24, 2021, would be worth about $809 today.
Looking ahead, analysts are still expecting new highs for Salesforce in the next 12 months. The average price target among 45 analysts covering the stock is $315, suggesting a 60% upside from current levels.
Photo: Mohammed Alim from Pixabay
