What’s up?

Salesforce.com, the provider of software and cloud-based services for corporate clients, will report Q1 earnings after the market close on Tuesday, June 4. That’s a good enough reason to look into the stock.

Why is it important?

In general

During recent months, the stock of Salesforce.com has been following the general dynamics of the market. Just like other stocks of tech companies, it got hurt by the trade conflict between the United States and China.

For investors

According to the consensus forecast, revenue of Salesforce increased by 22.5% y/y during the first months of 2019 but EPS accounted for $0.61, down from $0.74 a year ago.

Notice that the company’s last earnings report that came out in March disappointed investors. I addition, back then CRM gave a rather pessimistic outlook. On Monday, JPMorgan removed Salesforce.com from its Focus List. This move is understandable: the stock has become too expensive (its P/E is about 2 times bigger than the industry average). As a result, the mixed earnings report and the concerns related to the global economic slowdown will likely maintain the negative pressure on the company for the time being. Salesforce.com has to give investors larger profits for its stock to resume the uptrend.

At the same time, if we look at the bigger picture, we’ll see that Salesforce’s overall position is still sound. It occupies a specific market that will continue developing in the coming years. CRM made a lot of investments that will pay back in the future. As a result, the stock is worth monitoring.

For traders

CRM stock has been consolidating between $168 and $151 for the past 4 months. Then, however, it decisively tested the lower border of this range unwilling to pursue new record highs. On the downside, it’s vulnerable for a decline to $140.70 (50% Fibo of the 2018-2019 advance) and $134.30 (the next Fibo level). To restore the upside, the price needs to get back above the 50-week MA at $148.90.

The weekly chart of Salesforce.com Inc.
Salesforce.com Inc., weekly chart