Salesforce: Bargain Buy or Value Trap?
Okay, let's get one thing straight right off the bat: Salesforce. Everyone's favorite CRM overlord. Or...was everyone's favorite?
The "Support" System That Isn't
They're saying it's operating within a support range of $243.82 - $269.48. "Support range," my ass. Sounds more like a "holding on for dear life" range to me. Six times in ten years, this has happened, and they bounced back with an average 23.4% return? So what? Past performance doesn't guarantee future results. We all know that disclaimer, right? It's practically tattooed on every investor's forehead. I'm no tech bro, but I can read a chart, and this one's not exactly screaming "buy me."
And that 70% drop during the Global Financial Crisis? 59% during the inflation surge? Thanks for the history lesson, but I'm trying to figure out if I should short this thing.
The real issue? Slower revenue growth. Blame it on "softened enterprise spending" and "geopolitical pressures" if you want. I blame it on overpriced software and companies finally realizing they don't need another platform telling them how to run their business.
AI Hype and Data Dreams
Of course, they're throwing money at AI and Data Cloud. Every damn company is. It's the new buzzword bingo. "AI-powered solutions!" "Data-driven insights!" Give me a break. It's like slapping a fresh coat of paint on a rusted-out car and expecting it to win the Indy 500. Will it work? Maybe. Does it justify a PE multiple of almost 37? Absolutely not.
They bought Slack for what, $27.7 billion? Remember that? Still trying to figure out how that was supposed to be a good idea. Another platform, another silo, another reason for employees to scream into the void. Did anyone actually want that deal?
8.3% LTM revenue growth. Yawn. 10.5% average over the last three years. Okay, fine, it's not terrible. But is it enough to justify the hype? Is it enough to make me forget about the fact that every other tech company is promising the moon and delivering…well, less than the moon? I don't think so.
31.6% free cash flow margin and 21.2% operating margin LTM…fine, they're making money. But for how long?
I'm smelling desperation here. They're trying to convince us that this is a "bargain buy" because the stock is down. But what if it's down for a reason? What if the market is finally waking up to the fact that Salesforce isn't the invincible juggernaut it used to be? Salesforce Stock Hits Support, Should You Buy Now? - Forbes
Then again, maybe I'm the crazy one here. Maybe everyone else is seeing something I'm not. Maybe I should just shut up and buy the dip like a good little sheep. Nah.
So, What's the Real Story?
It's a value trap. Plain and simple. They're betting the farm on AI, and it might pay off. But I'm not holding my breath. This ain't the screaming buy everyone thinks it is.