1. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 140
In those older episodes, Jim Cramer addressed the sharp 20% post-earnings drop in Salesforce, Inc. (NYSE:CRM). In the first segment, he broke down the company’s disappointing earnings report and explained why the stock’s after-hours collapse may have been overdone. In the following episode, he widened the lens to discuss broader weakness in the enterprise software sector but reiterated his long-term belief in Salesforce’s quality and resilience. Here are his comments from back then:
“What the heck just happened to the stock of Salesforce? That’s the king of customer relations management software. After the close, Salesforce reported a genuine miss. Several key lines were weaker than expected—revenue, operating margin, current remaining performance obligations—although the earnings per share number actually came in better than expected. […]
That said, I’m not sure it’s justified to make it a total meltdown in after-hours trading. The misses weren’t that big and there’s no doubt Salesforce is throwing off a ton of cash. […] But we’re so used to having this company do the right thing that I think it just took people by surprise. Or perhaps it shouldn’t—because the whole enterprise software sector that Salesforce belongs to seems under siege right now after what looks to be overearning during COVID. […]
Salesforce is a company that I’ve championed since it started—well, I guess really since it came public there in the single digits back in 2008… I have never heard of an unsatisfied customer of Salesforce.”
I’m not going to write off Salesforce. Too much cash, too much cash flow, too good, too many smart people. When the smoke clears and the stock works its way down, perhaps under 200, call me a buyer—provided we have requisite number of downgrades that help shake out all the weak hands. Can’t have them in there if we’re going in.”
Cramer remained a long-term believer and said to buy on weakness — a good call as the stock is up +12.62%.
Salesforce, Inc. (NYSE:CRM) is the world’s leading customer relationship management (CRM) platform, offering cloud-based tools for sales, marketing, service, and analytics.
Cramer remains a big believer in Salesforce. Here’s his analysis from a recent episode which aired in June:
“How come I’m sticking with this one?…. Look, I can’t dispute that the growth of the core business is slowing here, but that’s, I think, simply the law of large numbers… I don’t care that old Salesforce is seeing slower growth because it’s also seeing a significant increase in profitability. People are treating this like it’s an ailing revenue growth story, and that’s why they bought in Informatica to kind of hide it. But it’s increasingly become an earnings growth play, and the earnings growth is excellent, and Informatica doesn’t worry me.
As for the other legs of the controversy, again, the Informatica deal and the Agentforce ramp up, I gotta give you what might be a really unsatisfying answer: This is now a show me story. I hear Benioff’s arguments for why Informatica is good for Salesforce, but I understand why the market’s unconvinced. He’ll have to prove over time that the deal makes sense. I don’t think Marc wants to sit there and buy back a lot of stock…. He’s itching to buy more businesses if they’re additive, if they make the company faster growing, if they augment Agentforce. I see nothing wrong with that, but I don’t mind big buybacks either.
Now, how about this Agentforce? Again, Salesforce will just have to prove that the product’s a winner over time. What do we really want to see? I’ll tell you what we really want to see. We want to see more bold-faced customer wins, but more importantly, we need to see companies that use Agentforce engaging in large-scale, yes, layoffs….
In the end, look, I’m going to stick with Salesforce because they got an incredible track record. Every time there’s been some… uncertainty about the company’s outlook, the right call was to trust Marc Benioff and his team. Plus, at this point, the stock’s gotten surprisingly cheap. The numbers keep rising, yet the stock has struggled. I mean, the darn thing’s over 23 times earnings. That’s the cheapest Salesforce has been in ages…
Right now, I think you’re getting a steal, but here’s the bottom line: Salesforce is hated here because Wall Street doesn’t believe in the Informatica deal or in the core business, and they think it’s slowing, and the idea that Agentforce can somehow grow fast enough to make up for that difference, uh-uh. This is a moment where you need to have some faith in management. I have faith, but you need to decide for yourself if you’re willing to trust Marc Benioff and his team because ultimately that’s all this comes down to, and for many I know, that’s just not enough.”
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