Why Salesforce Stock Bounced More Than 4% Higher Today

Why Salesforce Stock Bounced More Than 4% Higher Today

What happened

Shares of cloud-based enterprise software provider Salesforce.com (NYSE:CRM) were trading 4.6% higher as of 2:05 p.m. ET Monday. The stock took a nearly 6% hit last week, a period that was capped off by news of the discovery of the omicron COVID-19 variant, and word that it has already begun to spread around the globe.

Besides a general reprieve from selling pressure as investors reassessed the risk presented by this new variant of concern, Salesforce’s stock price was also rising Monday due to a Wall Street upgrade. Analyst Patrick Walravens of investment research firm JMP Securities reiterated Salesforce as a buy and boosted his price target to $350 from $320 before.

So what

While analysts' price targets are subjective and don’t mean much for investors who are focusing on a company’s long-term potential, Salesforce has been getting plenty of positive attention ahead of its earnings report for its fiscal 2022 third-quarter (which ended Oct. 31). That report is due out Tuesday. Earlier this month, Salesforce stock got buy ratings and price target hikes from analysts at Credit Suisse, Deutsche Bank, and Morgan Stanley.

It’s not too hard to see why Wall Street is waxing optimistic. Back in September, Salesforce once again increased its revenue guidance for its fiscal 2022 to a range of $26.25 billion to $26.35 billion. It also provided an initial forecast for its fiscal 2023, projecting revenue in the $31.65 billion to $31.80 billion range, which would amount to growth of about 21% over fiscal 2022’s expected sales.

Now what

The customer relationship management software leader has built its offerings into a full-fledged digital transformation platform. Though the pandemic and its ongoing impacts continue to cast a pall over the global economy, Salesforce is going to be just fine. Enterprises around the world are looking for solutions to help them manage their transitions into a new digital era and to deal with issues around remote work and customer engagement.

That means this cloud computing leader should have no shortage of growth opportunities. CEO Marc Benioff hasn’t been shy about his $50 billion annual revenue goal, and Salesforce is on track to achieve that lofty target within a few years' time.

Salesforce promotes Bret Taylor to co-CEO alongside Benioff

In this article CRM

Salesforce on Tuesday promoted Bret Taylor to the role of co-CEO, alongside Marc Benioff, who co-founded the company in 1999. Taylor, 41, joined Salesforce in 2016, through the $412 million acquisition of his productivity software start-up Quip, which he co-founded four years earlier. Taylor quickly moved up the ranks to become president and chief product officer, and he now participates in quarterly earnings calls with analysts. “Bret is a phenomenal industry leader who has been instrumental in creating incredible success for our customers and driving innovation throughout our company,” Benioff said, in a press release announcing the promotion. “Together, Bret and I will lead Salesforce through our next chapter, while living our shared values of trust, customer success, innovation and equality for all.”

Bret Taylor David Paul Morris | Bloomberg | Getty Images

Before starting Quip, Taylor helped create Google Maps, sold social networking start-up FriendFeed to Facebook, and spent three years as Facebook’s technology chief. Taylor sits on Twitter’s board of directors, and on Monday was named chairman as part of Jack Dorsey’s departure as CEO. Taylor made $13.9 million in total compensation for the 2021 fiscal year, mostly from stock awards, according to Salesforce’s most recent proxy statement. He owns about $329 million worth of Salesforce shares, according to FactSet. Taylor received Salesforce stock in exchange for his Quip holdings. As part of his promotion, Taylor’s annual salary was increased to $1.4 million from $1 million, and his annual target bonus jumped to 200% of his base salary from 150%, Salesforce said in a filing. The company also said it intends to grand Taylor $3 million worth of performance stock units and options to purchase $2 million of Salesforce shares at the closing price on the grant date. The last time Benioff named another CEO of Salesforce came in 2018, when former Oracle executive Keith Block became co-CEO alongside Benioff. But Block stepped down less than two years later, and Benioff removed the “co” from his title.

Marc Benioff, chairman and co-chief executive officer of Salesforce.com Inc., speaks during the opening keynote of the 2019 DreamForce conference in San Francisco on Nov. 19, 2019. Salesforce.com Inc.s annual software conference, where it introduces new products and discusses its commitment to social causes, was interrupted for the second year in a row by protests against the company’s work with the U.S. government. David Paul Morris | Bloomberg | Getty Images

Taylor told people he was expecting to get the CEO job soon, the Information reported on Oct. 7. “Marc has been my mentor, my greatest supporter and my trusted friend for years,” he said in Tuesday’s statement. “Partnering with him to lead the company he co-founded 22 years ago is an enormous privilege.” Salesforce is the largest employer in San Francisco, drawing tens of thousands of attendees each year to its Dreamforce conference, where Benioff expounds on business trends. Benioff regularly engages in politics, directs money to philanthropic causes and, with his wife, Lynne, acquired ownership of Time Magazine from Meredith Corp in 2018. Salesforce has expanded beyond its core of providing cloud-based software for sales reps, with products for customer service, marketing and commerce. Acquisitions of MuleSoft, Tableau and most recently Slack have also helped Salesforce grow. One of Taylor’s first high-profile conference calls with Salesforce came after the announced $6.5 billion purchase of MuleSoft in 2018. Last year, Slack CEO Stewart Butterfield told Taylor that his company was interested in acquiring Quip from Salesforce. Taylor told Butterfield that wasn’t happening, but he later brought up the idea of Salesforce buying Slack, according to a regulatory filing. The $27.1 billion deal closed in July.

‘I am a simple man’

Salesforce stock rallies to snap longest losing streak in 21 months a day before earnings report

Shares of Salesforce.com Inc. CRM, -1.10% charged up 4.6% in afternoon trading Monday, enough to pace the Dow Jones Industrial Average’s DJIA, -0.17% gainers, a day before the customer relationship management software company reports fiscal third-quarter results. The stock’s $13.09 price gain was adding about 86 points to the Dow’s price, while the Dow jumped 281 points, or 0.8%. The stock’s rally puts it on track to snap a six-session losing streak, which has been the longest such streak since the six-day stretch that ended Feb. 28, 2020. The stock had shed 7.7% during the latest losing streak. Salesforce is scheduled to report results for the quarter through October after Tuesday’s closing bell, with the average analyst estimates for earnings per share of 92 cents and revenue of $6.80 billion, according to FactSet. The company has beat EPS and revenue expectations for at least the past 20 quarters, but the stock has gained the after earnings were reported 11 times after those past 20 earnings reports. The stock has rallied 11.5% over the past three months while the Dow has slipped 0.8%.