How Low Can Salesforce Stock Go?

by

Salesforce (CRM) shares have decreased by 20.4% over the past 21 trading days. This recent decline is indicative of worries regarding missed revenue projections and difficulties in AI adoption; nonetheless, significant drops often prompt a more challenging inquiry: is this decline just temporary, or does it signal more profound issues in the business narrative? Separately, with volatility in the market increased as of late, the road forward may be bumpier. But, see Can AI Demand Drive NVDA Stock To $240?

Before assessing its downturn resilience, let’s examine Salesforce’s current position.

  • Size: Salesforce operates as a $200 billion company with a revenue of $40 billion, currently trading at $210.81.
  • Fundamentals: Recorded a revenue growth of 8.4% over the last 12 months, with an operating margin of 22.0%.
  • Liquidity: Exhibits a debt-to-equity ratio of 0.06 and a cash-to-assets ratio of 0.12.
  • Valuation: Salesforce stock is presently valued at a P/E ratio of 27.7 and a P/EBIT ratio of 22.5.
  • Historically, it has yielded a median return of 60.5% within a year after experiencing significant declines since 2010. Refer to CRM Dip Buy Analysis.

These figures indicate a Strong operational performance, paired with a Moderate valuation — rendering the stock Attractive. For further information, refer to Buy or Sell CRM Stock.

This brings us to an important aspect for investors concerned about this drop: how resilient is CRM stock if the market declines further? This is where our downturn resilience framework becomes relevant. If CRM stock drops an additional 20-30% to $148 — are investors able to maintain their holdings comfortably? Evidence suggests that the stock experienced a lesser impact than the S&P 500 index during various economic downturns, based on (a) the magnitude of the stock’s decline and (b) the speed of its recovery. Below, we explore each of these downturns in more detail.

2022 Inflation Shock

  • CRM stock declined by 58.6% from a peak of $309.96 on 8 November 2021 to $128.27 on 16 December 2022, compared to a peak-to-trough drop of 25.4% for the S&P 500.
  • Nevertheless, the stock completely recovered to its pre-Crisis peak by 1 March 2024.
  • Since that time, the stock has risen to a high of $367.87 on 4 December 2024 and is currently trading at $210.81.

2020 Covid Pandemic

  • CRM stock fell by 35.7% from a high of $193.36 on 20 February 2020 to $124.30 on 16 March 2020, whereas the peak-to-trough drop for the S&P 500 was 33.9%.
  • Yet, the stock entirely regained its pre-Crisis peak by 6 July 2020.

2018 Correction

  • CRM stock decreased by 24.8% from a high of $160.43 on 27 September 2018 to $120.67 on 20 November 2018, in contrast to a peak-to-trough drop of 19.8% for the S&P 500.
  • Nevertheless, the stock entirely recovered to its pre-Crisis peak by 12 February 2019.

2008 Global Financial Crisis

  • CRM stock fell by 70.5% from a high of $18.61 on 23 June 2008 to $5.49 on 19 November 2008, while the S&P 500 experienced a peak-to-trough drop of 56.8%.
  • Nonetheless, the stock fully regained its pre-Crisis peak by 29 December 2009.

Feeling anxious about CRM stock? Consider a portfolio strategy.

Portfolios Are The Intelligent Way To Invest

Individual selections can be volatile, but maintaining an investment is crucial. A well-diversified portfolio assists in staying on course, capitalizing on upside potential, and minimizing downside risks.

The Trefis High Quality (HQ) Portfolio, featuring 30 stocks, boasts a strong history of consistently outperforming its benchmarks, which include all three – the S&P 500, S&P mid-cap, and Russell 2000 indices. What accounts for this? Collectively, HQ Portfolio stocks yielded superior returns with reduced risk compared to the benchmark index; providing a smoother investment experience, as demonstrated by HQ Portfolio performance metrics.

Leave a Comment