Salesforce Stock Prediction: Growth is Imminent

Devin Gellis I Know FirstDevin Gellis is a Junior Financial Analyst at I Know First.

Salesforce Stock Prediction

CRM Stock Prediction

Salesforce.com, (CRM) is an American cloud technology computing company based in San Francisco, California. Salesforce is the top market customer relationship management software industry.

Summary:

  • Attempts in international progression
  • Salesforce acquisition of Demandware
  • Collaboration with Microsoft with new outlook feature “Lightning for Outlook”
  • The I Know First algorithm shown a bullish signal

 

International Exposure:

Salesforce is on top of the market in the customer relationship management software industry, but it seems to be lacking one key component, overseas sales. Cowen Group, a market research firm, mentioned that Salesforce creates a significantly lower percentage of revenue internationally, compared to its competitors. Companies such as SAP, Oracle, and Microsoft generate over 50% of their sales internationally, while Salesforce only accumulates 32%. An underlying factor for these numbers could be with overseas companies being hesitant to store their data in the cloud. The dilemma for CRM is they only offer cloud-based software. In attempts to fix the problem, Salesforce has made substantial investments in the European region, manufacturing it’s first EU-based data center in the United Kingdom in 2014. Over the past couple of years, they have also opened new centers in Germany and France, while at the same time announcing a new partnership to access Amazon Web Service’s for certain segments of its European services. As a result, the company saw a 33% growth in the European and Middle Eastern regions and a comparable 27% growth in the Asia-Pacific region, according to Salesforce’s most recent earnings.

Salesforce and Demandware deal:

On July 11th, the deal between Salesforce and Demandware was completed. Salesforce acquired Demandware for approximately 2.8 billion dollars, a purchase offer of $75 per share in cash for all outstanding shares. Demandware specializes in offering support for website, mobile apps and digital stores. Their digital marketing will help Salesforce to create a solid marketing platform. At the same time, the acquisition will enhance their competitive advantage and help obtain a substantial market share from traditional software providers. It is the biggest acquisition in Salesforce’s history.

Salesforce and Microsoft collaborate on “Lightning for Outlook”:

On June 28th, the collaboration between Salesforce and Microsoft was announced. The “Lightning for Outlook” application will allow users to use Salesforce data from inside their Microsoft Outlook email with no need to switch between multiple applications. It will also allow sales rep and other relevant users to find the related they need at a faster rate. A minor detail, but significant in the scheme of things is the new pane to the standard outlook window, as a result of the “Lightning for Outlook”. This comes after a constant bidding war between Salesforce and Microsoft over the ownership of LinkedIn, which ultimately ended with Microsoft purchasing LinkedIn for 26 billion dollars.

crmticker

 

Algorithmic Analysis

I Know First supplies financial services, mainly through stock forecasts via their predictive algorithm. The algorithm incorporates a 15-year database, and utilizes it to predict the flow of money across 7,000 assets. The self-learning algorithm uses artificial intelligence, predictive models based on artificial neural networks, and genetic algorithms to predict money movements within various markets.

The algorithm produces a forecast with a signal and a predictability indicator. The signal is the number in the middle of the box. The predictability is the number at the bottom of the box. At the top, a specific asset is identified. This format is consistent across all predictions. The middle number is indicative of strength and direction, not a price target. The bottom number, the predictability, signifies a confidence level.

I Know First has had success predicting Salesforce’s stock behavior in the past, as seen in the forecast below. In this TechStock forecast, Salesforce had a signal strength of 6.85 and a predictability indicator of 0.42 for the three-month time horizon. In accordance with the algorithm’s prediction, the stock price increased 9.00% during that 3 month period.

 

Conclusion:

In my mind, Salesforce will continue to rise as they have the past 5 years. The acquisition of Demandware will expand their capabilities and continue to make the stock prosper. If they keep expanding at this rate, their international possibilities could be endless and be a dominant force in the international market. The joint venture of “Lightning” and Outlook to create the “Lightning for Outlook” will enhance and has the potential to create more innovative technology. In my opinion, salesforce will remain bullish as a result. Supported by the still positive algorithmic forecasts from I Know First’s machine-learning supercomputer. Salesforce’s predictive scores for 1 Month, 3 Months, and One year are all positive. There is a slim chance of CRM falling substantially.


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