Trading Salesforce Post Q4 Earnings
The performance of customer relationship management software company Salesforce has been in the spotlight this earnings season as the company deals with five activist investors.
Activist investors are typically hedge funds which buy minority stakes in publicly traded companies to change how it is run to boost shareholder value.
Salesforce just reported its fourth quarter earnings. Learn more about the earnings report, what the analysts are forecasting for the stock and how to trade it below.
|Symbol for Invest.MT5 Account:
|Date of Idea:
|7 Mar 2023
|1 - 6 months
|Position Size for Invest.MT5 Account:
- The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.
All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing.
Salesforce Q4 Earnings Report
Here are some of the key highlights from the latest fiscal fourth-quarter earnings report from Salesforce:
- Earnings per share of $1.68 against $1.36 expected
- Revenue of $8.38 billion against $7.99 billion expected
- Revenue growth of 14% year over year
- Net loss of $98 million higher than loss of $28 million a year ago
- Expected 10% cut of workforce, estimated over 7,000 people
- Adjusted operating margin of 29.2% highest in history
- 2024 fiscal year forecast of $7.12 to $7.14 earnings per shares higher than analysts expected
- Share buyback program expanding to $20 billion
On the face of it, Salesforce beat analyst expectations on earnings per share and revenue. The 2024 fiscal year forecast was also higher than analysts were expecting. The stock jumped more than 16% on the earnings release.
However, the guidance assumes that there will be no growth in its sales cycles. Profitability has been a key metric for Salesforce as five activist investors have taken stakes in the company.
Activist investors usually represent hedge funds who take minority stakes in publicly traded companies to force through changes that they believe will increase company profitability and shareholder value. This could be through management changes or even breaking the company up into different entities.
Someo of the biggest activist investors that have taken an interest in Salesforce include Third Point, Starboard Value and Elliott Management. On the day of the earnings release, Elliott Management said it would be putting forward its own candidates for board of directors to gain voting control to initiate some changes.
While the earnings report was strong, it seems activist investors believe more can be done to improve the company which could lead to a rockier path ahead if a corporate management battle ensues.
Salesforce Stock Forecast - What do the Analysts Say?
According to analysts polled by TipRanks for a Salesforce stock forecast in the past 3 months, there are currently 25 buys, 10 holds and 1 sell rating on the stock. The highest price level for a Salesforce stock forecast is $320.00 with the lowest price target at $145.00.
The average price target for a Salesforce stock forecast is $224.21.
An Example Trading Idea for the Salesforce Stock Price
An example trading idea for the Salesforce share price could be as follows:
- Buy the stock on a break above the post earnings high at $195.00.
- Target just below the highest analyst price target of $320.00.
- Keep your risk small at a maximum of 5% of your total account.
- Time Line = 1 – 6 months
- If you buy 10 Salesforce shares:
- If target is reached = $1,250.00 potential profit ($320.00 - $195.00 * 10 shares).
Remember that markets go up and down and it is unlikely the share price will move up in a straight line. In fact, it may even go much further down before it rises, especially considering the volatility that could develop with activist investors circulating the stock.
Be sure to exercise good risk management and always know how much you could potentially lose on a trade and the risks involved, as well as the costs.
With the Admirals Invest.MT5 account you can buy and sell US stocks with a commission from $0.02 per share. This means buying 10 shares in Salesforce stock would result in a commission of $0.20 ($0.02 * 10 shares) for executing a per-side transaction.
There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall!
How to Buy Salesforce Stock in 4 Steps
With Admirals, you can buy shares in companies like Salesforce with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks.
- Open an account with Admirals to access the Trader’s Room.
- Click on Trade on one of your live or demo accounts to open the web platform.
- Search for your stock at the bottom of the Market Watch window and drag the symbol onto the chart.
- Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.
Click on the banner below to trade Salesforce stock today! ▼▼▼
Do You See the Salesforce Stock Price Moving Differently?
Remember that all analytics and trading ideas are based on the personal view and experience of the author.
If you believe there is a higher chance Salesforce's share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.
This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article.
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