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Why 2016 Hasn’t Been Great for Salesforce

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Nov. 20 2020, Updated 1:38 p.m. ET

Salesforce stock continued to decline in 2016

Previously in the series, we discussed the possibility that Salesforce (CRM) is likely to beat analysts’ expectations with its fiscal 4Q16 and 2016 results. 2015 was the year when the company’s stock surged more than 30%, as the below share price chart shows. In the past couple of quarters, Salesforce has been able to consistently beat analyst expectations, which has given its share price a substantial boost.

However, 2016 has not been very kind to Salesforce. In 2016, Salesforce stock has shed close to 30% of its value. According to S&P Global Market Intelligence data, Salesforce stock fell by ~13% in January 2016.

[marketrealist-chart id=1061651]

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Tableau Software and LinkedIn outlooks further contributed to Salesforce’s stock decline

In February 2016, Salesforce’s stock again fell close to 13% when Tableau Software (DATA) released its earnings and shared a soft corporate outlook that led to a 50% fall in share price. LinkedIn’s (LNKD) issuance of weaker-than-expected guidance for 2016 caused its shares to tumble by ~44% and exacerbated the downfall in tech stocks.

Stock prices of Fortinet (FTNT), Palo Alto Networks (PANW), FireEye (FEYE), CyberArk (CYBR), and Proofpoint (PFPT) all fell in the range of 7% to 13%. In a later part of the series, we will discuss the factors that boosted the company’s falling share price.

Investors who wish to gain exposure to Salesforce can consider investing in the SPDR S&P 500 ETF (SPY). SPY has an exposure of ~29% to application software. It invests ~0.23% of its holdings in Salesforce.

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