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Hype Asset of the Day | June 16, 2022



Salesforce Inc. (NYSE: CRM)

Salesforce is the leader in customer relationship management (CRM) software, and one of the oldest companies in the industry. Headquartered in San Francisco, California, the company makes cloud-based software designed to help businesses find more prospects, close more deals, and win more customers using its proprietary services. After the major shift to doing business online, Salesforce has become a stock to watch out for with an increase in positive hype of 113% over the last day prompting investors to look into what made this stock do so well.

Currently, Salesforce Inc trades at $163.4 per share.


Positive Hype

There are lots of reasons that Salesforce has generated so much positive hype recently, here are some of them.


  • Salesforce expects to generate 20% sales growth this year and trades at six times sales as well. Overall, global CRM software sales are expected to grow by a low double-digit percentage through at least the midpoint of the decade.


  • According to the IDC, Salesforce has been the global CRM spending leader for nine consecutive years. Through 2020, Salesforce led the CRM market with an estimated 32% market share and accounted for almost 24% of worldwide CRM solutions spending in 2021.


  • Management estimates that its global addressable market will grow to $284 billion by 2026; the company's $28 billion in revenue over the past four quarters underlines the ample room for future growth.


  • Salesforce has continued to expand through successful key acquisitions. The most recent acquisition, Slack, outperformed revenue expectations with $348 million in the quarter.


  • The market sell-off has taken the stock down to a historically low valuation of 6.8 times trailing revenue, making it a great time to buy the stock.


  • Salesforce has solid financials and growth statistics. This time revenue was up $7.4 billion which is 26% from a year ago, and operating cash flow of $3.7 billion, was up 14%.


  • In addition, Salesforce has more than tripled its annual free cash flow over the last five years to $5.72 billion.



Negative Hype

Despite there being an ample number of reasons that would make it a good idea to take a position in Salesforce right now, it is also important to consider the downsides of this opportunity. Here are some of them.

  • Despite the fall, the stock still isn’t cheap and is priced at more than 40 times this fiscal year's expected per-share earnings.


  • Salesforce lowered its full-year guidance for revenue, this might mean they’re looking to spend less money. The downward guide on the revenue side really seems to be more tied to foreign currency impacts and so that's something we typically do over the long haul.


  • Salesforce is one of just three Dow stocks that doesn't pay dividends.



Conclusion

All in all, considering its strong set of fundamentals as well as recent financial performance, Salesforce shares are an asset to look out for. Nonetheless, factors such as its relatively high price and the potential of an economic downturn might make it a less appealing purchase. Considering once again that Salesforce is the industry leader by far, it might still be worth the shot. If you’d like to receive more trending stocks straight to your inbox, check out our premium plans. Alternatively, if you’d like to hear more about the services offered by HypeIndex, you can check out our FAQ page.



HypeIndex is an AI platform that detects Hype in stocks and cryptos before it moves the market, providing reliable early detection for profitable investment opportunities.

The algorithm for our proprietary HypeIndex score is based on sentiment analysis, data science and machine learning.









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