Salesforce – Is it to Fall Even Further?Fundamental Indicators:
Sector – Technology
US Business Cycle Stage – late cycle, when this sector is not favourable
Revenue – consistent growth for the past 10 years, 26% annual growth 5-year average
Profits – significant drop from 2021
Net margin – quite low with 3.59% for tech company
P/E – extremely high at 188 compared to S&P500 with 21 and Technology sector 27
Liabilities - debt ratio is at 0.37 which is within normal limits, Net Debt/ EBITDA is negative – no problems with debt
Conclusion – great financial performance for the past 10 years but given the extremely high PE ratio and the current global economic situation it is grossly overpriced, so it is very likely to continue correcting
Technical Analysis (Elliott Waves):
Main scenario of this idea suggests that we are still observing development of the global growth cycle which is currently at the stage of completing the first leg of corrective wave 4 (see higher timeframe graph)
Since the correction of March 2020, the stock price considerably updated historic highs but slightly choppy with a challenging EW count, in this case an Ending Diagonal has been chosen as wave 5 (see guidelines for Ending Diagonals below)
From the high of October 2021 there has been a sharp fall in a clear impulsive move of wave A, followed by a sideway correction in wave B
The next move in wave C is expected to reach $115-$122 and this will finalise the first leg of the global corrective wave 4
This is a higher timeframe to reflect the full history of Salesforce and to provide full wave count:
This is the link to the guidelines for Ending Diagonals
What do you think about Salesforce and its short term prospects?
Also let me know if you would like to see other stocks, indices, Forex or Crypto analysed using Elliott Waves.
Thanks
