For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in Salesforce.com (CRM) ten years ago? It may not have been easy to hold on to CRM for all that time, but if you did, how much would your investment be worth today?
Salesforce.com's Business In-Depth
With that in mind, let's take a look at Salesforce.com's main business drivers.
Headquartered in San Francisco, Salesforce, Inc., founded in 1999, is the leading provider of on-demand Customer Relationship Management (CRM) software, which enables organizations to better manage critical operations, such as sales force automation, customer service and support, marketing automation, document management, analytics and custom application development.
Salesforce is currently the largest CRM vendor in the world with a market share of nearly 20% according to reports of Gartner, a global research and advisory firm. Its nearest rival, SAP is way behind at a market share of around 8%. About 90% of the Fortune 100 companies uses at least one Salesforce software.
The company has leveraged its expertise in on-demand software to increase the scale of operations. It also offers a technology platform for customers and developers to build and run business applications.
Salesforce helps companies of every size and industry to connect with their customers in new ways through existing and emerging technologies including cloud, mobile, social, IoT and artificial intelligence (AI).
Rapid digital transformation and the company’s sustained focus on aligning products with customer needs are driving the top line. Salesforce’s annual revenues have sextupled from $5.4 billion in fiscal 2015 to $31.4 billion in fiscal 2023.
There are two main revenue streams — Subscription and Support and Professional Services & Other.
Subscription revenues comprise subscription fees from customers, accessing the company’s enterprise cloud computing services (Cloud Services), software licenses and subscription fees recognized from customers for additional support. This segment accounted for more than 93% of Salesforce’s fiscal 2023 revenues.
Professional Services & Other revenues consist of fees that the company derives from consulting and implementation services and training. This segment accounted for the remaining 7% of Salesforce’s fiscal 2023 revenues.
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Salesforce.com ten years ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in December 2013 would be worth $4,731.76, or a gain of 373.18%, as of December 6, 2023, according to our calculations. This return excludes dividends but includes price appreciation.
The S&P 500 rose 155.86% and the price of gold increased 57.87% over the same time frame in comparison.
Analysts are forecasting more upside for CRM too.
Salesforce is benefiting from a robust demand environment as customers are undergoing a major digital transformation. The company’s sustained focus on aligning products with customer needs is driving the top line. Continued deal wins in the international market are another growth driver. The acquisition of Slack has positioned the company as a leader in enterprise team collaboration and improved its competitive standing versus Microsoft Teams. Salesforce’s strategy of continuously expanding generative AI offerings will help the company tap the growing opportunities in the space. Shares of the company have outperformed the industry in the past six months. However, stiff competition and unfavorable currency fluctuations are concerns. Also, the challenging macroeconomic environment and geopolitical issues could hurt its growth prospects.
Shares have gained 18.50% over the past four weeks and there have been 17 higher earnings estimate revisions for fiscal 2024 compared to none lower. The consensus estimate has moved up as well.
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