Elliott's Investment in SalesForce is a Mere Sign that the Stock's Finally Reached Fair Value
Activist investor Elliott has made a multibillion-dollar investment in Salesforce (CRM). Elliott will probably push for CRM to make operational improvements (and possibly seek board representation). The company's already laid off 10% of its workforce. The fears of an economic slowdown may prompt potential customers to postpone the acquisition of new CRM functionality. Revenue has recently decelerated.
The stock's lost about 50% of its value in a little over a year. A co-CEO's leaving the company, and so is the co-founder of Slack Tech, which CRM acquired last year (after buying Tableau and MuleSoft earlier). Starboard Value, another top investor, has also acquired a key stake in CRM. But, unsurprisingly, it's not advocated for major changes. Indeed, there is nothing too exciting about all this.
A simple reading is that the stock had become way too expensive a year plus ago; the market was still ebullient back then. Now, it's fairly valued. CEO Bernioff remains on top and is doing just about everything right. Elliott's not pushing for radical changes by the way here (not yet anyway). The shares are likely to resume a slow (maybe not so slow) and steady climb. Fair value of $250 in 2.5 years (the stock trades at around $150 this morning) is not out of the question.
The stock's lost about 50% of its value in a little over a year. A co-CEO's leaving the company, and so is the co-founder of Slack Tech, which CRM acquired last year (after buying Tableau and MuleSoft earlier). Starboard Value, another top investor, has also acquired a key stake in CRM. But, unsurprisingly, it's not advocated for major changes. Indeed, there is nothing too exciting about all this.
A simple reading is that the stock had become way too expensive a year plus ago; the market was still ebullient back then. Now, it's fairly valued. CEO Bernioff remains on top and is doing just about everything right. Elliott's not pushing for radical changes by the way here (not yet anyway). The shares are likely to resume a slow (maybe not so slow) and steady climb. Fair value of $250 in 2.5 years (the stock trades at around $150 this morning) is not out of the question.