Will Salesforce (CRM) Stock collapse in 2023?

Salesforce (CRM) is a popular value investment because it is the largest provider of customer relationship management software.

For example, Salesforce claims to operate the top CRM platform with over 150,000 customers worldwide, Ascdenix estimates. Salesforce customers include Amazon (AMZN), Spotify (SPOT), Amazon Web Services (AWS), US Bank, Walmart (WMT), Toyota (TM), Macy’s (M), T-Mobile (TMUS), Aadidas, and United Health Group (UNH).

Moreover, Salesforce is a huge player in the cloud software market. Salesforce claims it had a 22.9% share of the global CRM software market in the first half of 2022. Ascendix estimates Salesforces’ Marketing cloud had a 14.1% share of the marketing cloud services market. Similary, Ascendix estimates Salesforces’ Sales Cloud controlled 40.6% of the market and Salesforce’s Service Cloud controlled 45.3% of the market.

Salesforce SaaS

Salesforce’s principal business is software-as-a-service (SaaS) For example, Salesforce (NYSE: CRM) offers over 3,400 SaaS apps through its App Exchange marketplace.

Sales Cloud generated 25.97% of Salesforce’s subscription and support revenues worth $5.19 billion in the last fiscal year, Ascendix estimates. Service Cloud generated 26.98% of Salesforce’s subscription and support revenues worth $5.38 billion. Saleforce’s platform generated 31.38% of subscription and support revenues worth $6.27 billion. Marketing and Commerce solutions generated 15.66% of Salesforce’s subscription and support revenues worth $3.13 billion.

Salesforce products include Salesforce Customer 360 which they describe as the world’s number one CRM solution. Salesforces claims Customer 360 had a 22.9% share of the market in the first half of 2022. The Genie Customer Data Cloud stores customer data and makes it available through apps, devices, and real-time data streams.

Salesforce Cloud Services

Customers can access the Genie Customer Data Cloud through Salesforce apps, such as Salesforce Einstein and Salesforce Flow. Organizations can build infrastructure to access Genie Customer Data Cloud through Hyperforce.

Genie gives customers access to the Data Cloud, the Service Cloud, the Marketing Cloud, the Commerce Cloud, the Taleau Analytics Platform, the Salesforce Platform, Slack, and MuleSoft automation and data integration.

The Genie Customer Data Cloud offers strategic partnerships with Snowflake, Google, Amazon Ads, Meta (Facebook), and Amazon Web Services (AWS).

Is Salesforce’s stock collapsing?

Many people will wonder if Salesforce’s stock price is collapsing because Mr. Market pays less for CRM.

For example, Mr. Market paid $254.34 for CRM shares on 29 December 2021 and $132.59 for Salesforce on 30 December 2022. Hence, Salesforce lost $121.75 in share value in just over a year.

Conversely, Salesforce (CRM) is making more money. For example, Salesforces’ quarterly profit grew from $5.019 billion on 31 October 2021 to $5.579 billion on Halloween Day 2022. Similarly, Salesforce’s quarterly operating income grew from $38 million on 31 October 2021 to $460 million on 31 October 2022.

Overall, Salesforce’s quarterly revenues grew from $6.863 billion on 31 October 2021 to $7.837 billion on Halloween day 2022. Thus, Salesforce is a growing company with a shrinking stock price.

For example, Stockrow estimates Salesforce’s revenues grew by 14.19% in the quarter ending on 31 October 2022. However, the revenue growth rate fell from 26.65% in the quarter ending on 31 October 2022.

How Much Cash is Salesforce Generating?

Ironically, Salesforce (CRM) is generating less cash. For example, the quarterly operating cash flow fell from $404 million on 31 October 2021 to $313 million on 31 October 2022.

Similarly, the quarterly ending “cash flow” went from -$1.546 billion on 31 October 2021 to -$855 million on 31 October 2022. However, Salesforce can generate enormous amounts of cash. It reported a $6.859 billion quarterly ending cash flow on 30 April 2022. There was a $3.676 billion quarterly operating cash flow on 30 April 2022. Plus, there was a $533 million quarterly investing cash flow on 31 October 2022.

Conversely, Salesforce has more cash. The cash and short-term investments grew from $9.381 billion on 31 October 2021 to $11.918 billion on 31 October 2022. Thus, Salesforce is a cash-rich company.

How Much Debt does Salesforce (CRM) have?

Appealingly, Salesforce (CRM) has less debt. The total debt fell from $11.303 billion on 31 October 2021 to $10.6 billion on 31 October 2022.

Salesforce repays enormous amounts of debt. It reported a -$1.678 billion quarterly financing cash flow on 31 October 2022. The quarterly financing cash flow fell from $136 million on 31 July 2022.

In 2021, Salesforce borrowed an enormous amount of money. It reported a quarterly financing cash flow of $8.44 billion on 31 July 2021.

What Value Does Salesforce (CRM) Offer?

I think Salesforce (CRM) offers enormous value at $132.59. For example, Salesforce had total assets of $91.884 billion on 31 October 2022.

The Total Assets grew from $87.436 billion on 31 October 2021 but fell from $95.209 billion on 31 January 2022. Thus, Salesforce’s value is growing.

Moreover, Salesforce is in a growing business. Grandview Research estimates the global SaaS market could grow from $186.6 billion in 2022 to $344.3 billion in 2028. Grandview estimates the SaaS market has a compound annual growth rate of 11%.

I think the growth and falling share price make Salesforce a value investment. If you are looking for a bargain software stock with growth potential. I think Salesforce is worth investigating.