Salesforce Stock (NYSE:CRM)
At the outset of trading this morning, news that value-investment firm Starboard Value LP had purchased a position in Salesforce (NYSE:CRM) sent the stock price up by as much as 7.5%. At 11:42 a.m. ET, Salesforce stock price had risen 3.4% today, a better performance than the 2% rise seen by the blue-chip weighted Dow Jones Industrial Average.
After last week’s devastating sell-off, investors’ moods seem to have stabilized. Despite a 40% year-to-date decline, the Starboard announcement may indicate to investors that Salesforce is now entering value territory.
What is the Reason?
New York-based Starboard Value is an investment firm that finds “deeply undervalued” businesses. Salesforce’s rapid expansion has made it a Dow Jones component. With its promising prospects for future development, stock in the blue-chip firm is likely to draw the attention of prominent hedge funds as it declines in price.
Considering the Salesforce stock past performance, this is a fantastic chance to acquire a high-quality business at a discount. Price-to-sales ratios for these shares are at their lowest since the market crisis of 2008. This is even though, on the most recent earnings call, management reaffirmed its commitment to increasing free cash flow margin while also delivering on its promise of increased revenue growth.
That’s good news for value investors who have been staying away from Salesforce stock due to its lofty price tag and lack of profitability. Investment back into the firm was favored by management to spur expansion.
What Should You Do Now
In the second quarter, Salesforce stock increased its revenue by 22% year over year. However, leadership anticipates a decrease in growth to 14% in Q3. Concerns about a likely slowdown in cloud-services investment moving into next year have been voiced by certain market players. Still, most of the bad news has already been priced into the stock.
Salesforce stock is among the most appealing growth companies to consider purchasing during the current market dip because of its leading position in the expanding customer relationship management business.
Featured Image- Megapixl @ nikkimeel
Author Shariq Khan 
