The stock for Marc Benioff’s Salesforce (CRM 0.67%) has sunk to a three-year low, but the downward slide might be more about investor fears and sentiment than actual fundamentals. For this reason, investors may want to consider buying the stock.
Today’s Change
(-0.67%) $-1.02
Current Price
$152.40
Key Data Points
Market Cap
$125B
Day’s Range
$150.62 – $157.06
52wk Range
$146.32 – $276.80
Volume
2.1K
Avg Vol
15M
Gross Margin
75.12%
Dividend Yield
1.12%
Last quarter, Salesforce revenue and earnings topped expectations. The company’s free cash flow was $6.6 billion. These aren’t exactly red flag warnings. So what seems to be the problem?
There are generally two main concerns holding investors back. The first is the strategy around monetizing AI. Salesforce’s Agentforce platform is supposed to help companies via AI agents to handle marketing, operations, and sales, and thus far, it seems to be working. However, there’s a real fear of cannibalization happening. The same AI agents helping enterprise clients could replace the seat-based subscriptions that Salesforce relies on.
Image source: The Motley Fool.
The second problem is with Salesforce’s acquisition strategy. The company is acquiring Fin, a customer service platform, for $3.6 billion. On the bright side, Fin brings about 30,000 business customers. On the other hand, there are concerns that Salesforce may need to buy growth rather than pursue it organically.
The company’s growth has indeed slowed, but Salesforce’s margins remain healthy, and the stock is currently attractively priced. Perhaps the fear of AI cannibalization is justified, but AI revenue could outpace the seats it eliminates. Time will tell.
Overall, Salesforce is still a powerhouse of a business, and I’m cautiously optimistic that Benioff’s behemoth can figure it out. A three-year low in stock prices looks like an opportunistic time to test the waters. As of market close on June 23, shares of Salesforce closed slightly above $153.
Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Salesforce. The Motley Fool has a disclosure policy.
