Salesforce stock price remains in a deep bear market after plunging by over 30% from its highest point this year. CRM was trading at $255, which has pushed its market capitalization from over $353 billion in December last year to $242 billion today.
Salesforce stock price technical analysis
The daily timeframe chart shows that the CRM stock price formed a double-top pattern at $365 and a neckline at $310, its lowest point in January.
Salesforce then tumbled and reached a low of $226, where it formed a double-bottom pattern with a neckline at $295. A double-bottom is a highly common bullish reversal pattern.
The stock remains below the 200-day Exponential Moving Average, a sign that bears are in control. Also, it has formed a bearish flag pattern, which is made up of a vertical line and a rectangle channel.
On the positive side, the Relative Strength Index (RSI) has formed a bullish reversal pattern. This pattern happened as it moved from below 30 to 58 today.
The MACD indicator also formed a bullish divergence, with the two lines crossing the zero line. Therefore, the Salesforce stock price forecast is neutral with a bearish bias.
A prolonged downtrend will be confirmed if the stock drops below the key support level at $226. A move below that level wll invalidate the double-bottom pattern and point to more downside.
Read more: Salesforce stock soars over 6% today: here’s why analysts are bullish
On the other hand, moving above the 200-day EMA at $263 will point to more gains, potentially to the key resistance level at $294, its highest level in May.
Why CRM stock is struggling in this AI boom
Salesforce, a top company in the software industry, has pivoted its business to the artificial intelligence industry, where it is building AI agents to help companies automate key procedures.
It has done that by launching Agentforce, a platform that makes it easy for companies to build these agents. It is now used by 6,000 paid companies, including popular brands like Dell, Pandora, Anthropic, and Williams-Sonoma.
The most recent results showed that Salesforce revenue rose by 10% in the second quarter to $10.2 billion, with its subscription revenue hitting $9.7 billion.
All parts of Salesforce business grew during the quarter, with the Platform and other, which includes Slack, being the best performer with a 16% annual growth rate. Integration and analytics grew by 12%, while sales and service rose by 8%.
Salesforce also boosted its forward guidance as it now expects to make between $41.] billion and $41.3 billion in revenue this year, representing an annual growth rate of between 8.5% and 9%.
The company also expects that the operating cash flow and free cash flow will grow by between 12% and 13%.
Therefore, while Salesforce is doing well, the stock has underperformed its peers because AI has not increased its revenue dramatically so far.
Also, the drop is because of the valuation reset. Data shows that the company is not as overvalued as it was a few months ago. Its forward price-to-earnings ratio has moved to 34.3, which is in line with that of the software industry.
The company’s rule-of-40 multiple is also above 40 when you use the levered free cash flow margin. In this case, it has a rule-of-40 figure of 45.
Therefore, fundamentals suggest that the stock may rebound as the company evolves from being a growth stock to a value one.
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