“Investors Eye Salesforce: Signs of Potential Recovery as Smart Money Inflows Increase”

Updated On: March 20, 2025 5:55 pm

Investors Eye Salesforce as Tech Sector Rebounds Amid Economic Uncertainty

With rising recession fears heightened by ongoing trade wars, investors seek alternative ways to safeguard their wealth. This has led to increased interest in assets such as gold and real estate investment trusts (REITs). Yet, some savvy investors are making a bolder move: rotating back into undervalued technology firms, particularly cloud software giant Salesforce Inc CRM.

However, investing in Salesforce’s Stock is a contrarian approach that carries risks. Alongside tariffs that might exert macroeconomic pressure on Salesforce’s main revenue streams, concerns about the company’s recent fourth-quarter earnings report also linger.

The earnings report showed mixed results. While earnings per share came in at $2.78, surpassing the consensus estimate of $2.61, revenue for the quarter was $9.99 billion, falling short of the expected $10.03 billion. This represented a notable rise from almost $9.3 billion from the same quarter last year, but the disappointment weighed on investor sentiment.

See also: US Home Sales Jump In February, Median Price Nears $400,000

Crucially, management provided guidance for fiscal year 2026 revenue ranging from $40.5 billion to $40.9 billion, below analyst expectations of $41.375 billion. This led to increased volatility in Salesforce’s share price following the announcement.

Recently, the stock seems to have developed a support level around $270, which may be grounded in new developments. Last week, Salesforce pledged to invest $1 billion in Singapore’s artificial intelligence sector, aiming to enhance the adoption of its AI product, Agentforce.

Moreover, analysts remain optimistic about Salesforce Stock, rating it a consensus Buy. Notably, Wedbush analyst Daniel Ives noted that despite geopolitical concerns causing market jitters, he believes Salesforce could emerge as one of the winners in the AI revolution.

Market Signals Indicate Opportunity

Investing in the stock market can be unpredictable due to the imbalance of opinions affecting prices. Retail investors may have one perspective, but the actions of institutional investors generally wield more influence. Thus, closely monitoring what these larger players are investing in is crucial.

In the latest trading sessions, Benzinga’s options scanner revealed bullish activity surrounding Salesforce. Notably, a significant transaction involved selling $240 puts expiring on October 17, 2025. This suggests that traders believe Salesforce’s stock won’t fall significantly below $240 by that time, receiving a premium of $11.40 per contract (or $1,140 for every 100 shares).

Additionally, swing traders might find the long $260 calls expiring on April 17 intriguing. These calls had an ask price of $25.15, resulting in a breakeven threshold of $285.15. With less than a month until expiration, Salesforce is well within reach of this target.

Wall Street traders aim for returns, so it’s plausible that Salesforce’s Stock could see significant upward movement. To ascertain how high it might go, statistical data provides valuable insight.

Looking at data from January 2019, holding a long position for any eight-week period had a 57.41% chance of yielding a profit, indicating a positive trend. Currently, Salesforce’s Stock has demonstrated modest momentum, with shares increasing about 2% in the last five sessions. Under similar conditions, an eight-week-long position now carries nearly a 65% chance of being profitable. Traders could expect median returns of 9.24% to 9.77% during that time frame.

Exploring Strategic Options with Salesforce

Given the market insights, aggressive traders may consider a multi-leg options strategy known as the bull call spread to capitalize on an anticipated recovery. This approach provides a cost-effective way to maintain a long position.

For the April 17 expiration, a promising strategy is the 280/290 bull spread. This involves buying the $280 call (current ask of $940) while simultaneously selling the $290 call (at a $480 bid). The sale of the short call reduces the net cost of the long call, resulting in a net debit of $460.

If Salesforce’s Stock reaches the $290 strike price by expiration, the trader will profit the difference between the strike prices (multiplied by 100 shares) minus the net debit paid, yielding a maximum reward of $540 per spread. This translates to a potential return of over 117% on what is roughly a 4% move in the stock price.

It’s important to note the downside risk: if CRM Stock does not perform as expected, the trader may lose the entire net debit paid, as the long call is currently out of the money (OTM). However, such significant profits from a major company like Salesforce are possible only with proper volume. This dynamic adds a layer of leverage, making options trading both risky and alluring.

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