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Headquartered in San Francisco, Salesforce, Inc. (CRM) is the market leader in providing on-demand CRM software for sales, marketing, customer service, and custom application development. With a market cap of $229.2 billion, it offers a technology platform for customers and developers to build and run business applications and helps companies connect with customers through cloud, mobile, social, Internet of Things (IoT), and artificial intelligence (AI), competing closely with its rivals like the Adobe Inc. (ADBE).
Companies worth $200 billion or more are generally classified as “mega-cap stocks.” Salesforce's market cap exceeds the mega-cap threshold, highlighting its size, stability, and influence in the tech sector. The company has transformed the CRM industry with its cloud-based platform that is affordable, user-friendly, and highly adaptable. Salesforce is also recognized for its unparalleled innovation and commitment to constant improvement, delivering state-of-the-art solutions to its clients.
However, the cloud titan has recently encountered some turbulence. CRM shares are trading 23.4% below its 52-week high of $318.71, achieved on March 1. Moreover, shares of Salesforce are down 19.3% over the past three months, underperforming the broader Nasdaq Composite’s ($NASX) 7.1% gains over the same time frame.
In the longer term, CRM is down 7.7% on a YTD basis, but the stock gained 14.1% over the past 52 weeks. By contrast, the NASX is up 14.4% in 2024 and 29.4% over the past year.
Delving deep into its price momentum, CRM has been trading below its 100-day moving average since mid-April and 200-day moving average since late May, indicating the stock’s bearish price trend.
Despite meeting Wall Street's expectations, CRM's stock dropped 19.7% on May 30 following the Q1 earnings results on May 29 and underwhelming forward guidance. The company's revenue guidance of $9.23 billion for the current quarter fell short of projections of $9.34 billion, and its billings of $6.18 billion also missed estimates. Additionally, the company lowered its full-year subscription revenue guidance.
However, the company has been riding the AI wave. Its Einstein AI solutions have been gaining popularity as they enhance CRM's platform by anticipating new sales opportunities and personalizing customer experiences, making them useful generative AI tools for businesses, especially in marketing.
Salesforce has been outpacing its main competitor, ADBE, with shares of Adobe gaining 9.4% over the past 52 weeks and declining 23.3% on a YTD basis.
Given CRM’s mixed price performance, analysts are cautiously optimistic about the stock’s potential. The stock has a consensus rating of “Moderate Buy” from 40 analysts covering it, and the mean price target of $294.66 reflects a premium of 21.4% to current levels.
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