Salesforce (CRM) tops Cloud Software Industry with new acquisition

Salesforce (CRM) is well on the way to fullfill its promise to reach a $138 billion market cap by 2024, contrary to the "corona recession" that caused it to hits its low in March. Corporate spending has been increasing on digital tech projects, and there has been talk of an acquisition of Slack Technologies for $27.7 billion, another widely used online software with high growth amid increases of stay-at-home work. It’s important to note that Slack had yet to generate a profit,  as its net loss increased from $141 million to $571 million last year. The Slack deal is set to close in the July 2021 quarter, allowing for Salesforce to correct 16% since reports have surfaced. This is a co-dependent relationship as Salesfroce cross-sells its service on Slack's platform and vice-versa. There has also been growing competition against Microsoft due to its cheaper priced tools. Microsoft offers the software Teams which has a generally higher user base than Slack, but there has been promising growth in Slack in the tech industry due to the recent talks of the acquisition. As CRM was added to the DOW Jomes industrial average this year, it's clear it has caused more talk of its increase in market capitalization, and we can also see that CRM is holding a Forward P/E ratio of 69.28, compared to the industry average Forward P/E of 37.9, distinguishing Salesforce to be trading at a premium. CRM also has a PEG ratio of 4.95, which is used similarly to the Forward P/E but also takes into account the expected earnings growth rate. We compare this to the cloud software industry average PEG ratio of around 2.96. This stocks is suggested to be a strong buy with a bullish view due to its futuristic business model making it naturally resistant to economic downfalls. Along with the acquisition making it a wider enhancement to Salesforce’s services, it could allow for more room to growth.

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parniakahrizi

Feb 5, 2021

19.79%

Change % Since Posting

238.44

Price When Posted

47.19

Change Since Posting

CRM

Salesforce.Com Inc

285.63

0.00
0.00%
Current Price

Salesforce (CRM) tops Cloud Software Industry with new acquisition

bullish

Salesforce (CRM) is well on the way to fullfill its promise to reach a $138 billion market cap by 2024, contrary to the "corona recession" that caused it to hits its low in March.

Corporate spending has been increasing on digital tech projects, and there has been talk of an acquisition of Slack Technologies for $27.7 billion, another widely used online software with high growth amid increases of stay-at-home work. It’s important to note that Slack had yet to generate a profit,  as its net loss increased from $141 million to $571 million last year. The Slack deal is set to close in the July 2021 quarter, allowing for Salesforce to correct 16% since reports have surfaced. This is a co-dependent relationship as Salesfroce cross-sells its service on Slack's platform and vice-versa.

There has also been growing competition against Microsoft due to its cheaper priced tools. Microsoft offers the software Teams which has a generally higher user base than Slack, but there has been promising growth in Slack in the tech industry due to the recent talks of the acquisition.

As CRM was added to the DOW Jomes industrial average this year, it's clear it has caused more talk of its increase in market capitalization, and we can also see that CRM is holding a Forward P/E ratio of 69.28, compared to the industry average Forward P/E of 37.9, distinguishing Salesforce to be trading at a premium. CRM also has a PEG ratio of 4.95, which is used similarly to the Forward P/E but also takes into account the expected earnings growth rate. We compare this to the cloud software industry average PEG ratio of around 2.96.

This stocks is suggested to be a strong buy with a bullish view due to its futuristic business model making it naturally resistant to economic downfalls. Along with the acquisition making it a wider enhancement to Salesforce’s services, it could allow for more room to growth.

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261.78

Target Price

7/ 10

Confidence

2-6 Months

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