Christmas came early for investors and Salesforce stock is on sale.
Why is the stock on sale? Well, it comes down to how Wall Street operates.
According to MarketWatch, Citi analyst Walther Pritchard downgraded the stock to “neutral”. Not surprisingly, traders jumped on the opportunity to hammer the stock. In reality, the selling pressure is short term. And rarely do investors get a chance to buy salesforce stock on weakness.
All too often, analyst rating changes like this cause volatile price action.
Salesforce Chairman and Chief Executive Marc Benioff pointed to Slack’s recent successful acquisitions. By the same token, Slack’s most recent financials agree with Benioff’s take.
So, a quick peak at Slack’s most recent quarter reveals growth picking up.
Then, coupled with fiscal discipline will help the push towards profitability.
Although Slack still operates at a loss, it won’t be for long.
Regardless of the short term, Salesforce is a force to be reckon with. So, investor’s should sit up and take a good look at buying Salesforce.
Technical Analysis
Above all, when a stock reacts to an analysts’ opinion it is a good idea to fall back on the technical price action. Fortunately, we have many tools at our disposal to help pick a good buying opportunity.
Current Technical Setup
- price trades below key moving averages
- key support level broken
- bearish ADX trend underway
At the moment the price chart tells us to wait for improvement before picking up any shares. Frankly, the price chart stinks at the moment.
Conclusion
All too often big headlines drive wild price action. In reality, the case with Salesforce is no different.
Yes, the $28 billion purchase is the biggest in Salesforce’s history. But, it could be a huge driver of future growth. And remember, ultimately, earnings growth drives a stock’s price higher.
Finding opportunities to buy salesforce stock on the cheap are rare. To be sure, this is one of those opportunities.
Stay tuned and I’ll post when the time comes to back up the truck.
Last week I wrote an article covering the Slack acquisition. Be sure to check it out if you need additional information.
