With Salesforce Stock Sliding, Have You Assessed The Risk?
Salesforce (CRM) stock is down 7.1% in a day. The recent slide reflects concerns over slow AI monetization and skepticism around its Slackbot launch, but sharp drops like this often raise a tougher question: is the weakness temporary, or a sign of deeper cracks in the story?
Before judging its downturn reslience, let’s look at where Salesforce stands today.
- Size: Salesforce is a $229 Bil company with $40 Bil in revenue currently trading at $241.06.
- Fundamentals: Last 12 month revenue growth of 8.4% and operating margin of 22.0%.
- Liquidity: Has Debt to Equity ratio of 0.05 and Cash to Assets ratio of 0.12
- Valuation: Salesforce stock is currently trading at P/E multiple of 31.6 and P/EBIT multiple of 25.7
- Has returned (median) 60.5% within a year following sharp dips since 2010. See CRM Dip Buy Analysis.
These metrics point to a Strong operational performance, alongside High valuation – making the stock Fairly Priced. For details, see Buy or Sell CRM Stock
That brings us to the key consideration for investors worried about this fall: how resilient is CRM stock if markets turn south? This is where our downturn resilience framework comes in. Suppose CRM stock falls another 20-30% to $169 – can investors comfortably hold on? Turns out, the stock saw an impact slightly better than the S&P 500 index during various economic downturns, based on (a) how much the stock fell and, (b) how quickly it recovered. Below, we dive deeper into each such downturn.
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2022 Inflation Shock
- CRM stock fell 58.6% from a high of $309.96 on 8 November 2021 to $128.27 on 16 December 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 1 March 2024
- Since then, the stock increased to a high of $367.87 on 4 December 2024 , and currently trades at $241.06
| CRM | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -58.6% | -25.4% |
| Time to Full Recovery | 441 days | 464 days |
2020 Covid Pandemic
- CRM stock fell 35.7% from a high of $193.36 on 20 February 2020 to $124.30 on 16 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 6 July 2020
| CRM | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -35.7% | -33.9% |
| Time to Full Recovery | 112 days | 148 days |
2018 Correction
- CRM stock fell 24.8% from a high of $160.43 on 27 September 2018 to $120.67 on 20 November 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 12 February 2019
| CRM | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -24.8% | -19.8% |
| Time to Full Recovery | 84 days | 120 days |
2008 Global Financial Crisis
- CRM stock fell 70.5% from a high of $18.61 on 23 June 2008 to $5.49 on 19 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 29 December 2009
| CRM | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -70.5% | -56.8% |
| Time to Full Recovery | 405 days | 1,480 days |
Feeling jittery about CRM stock? Consider portfolio approach.
Portfolios Win When Stock Picks Fall Short
Individual stocks can soar or tank but one thing matters: staying invested. The right portfolio can help you stay invested, capture upside and mitigate the downside associated with any individual stock.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.