Salesforce rose Tuesday as investors cheered the enterprise software maker's first price hikes in seven years. CRM stock neared a new entry point with the gain.
The company said it plans price hikes "across Sales Cloud, Service Cloud, Marketing Cloud, Industries and Tableau" software in August. Further, list prices would increase by an average of 9%, Salesforce said.
Salesforce sells software under a subscription model. Its software helps businesses organize and handle sales operations and customer relationships. Also, the company has expanded into marketing, e-commerce and data analytics.
"It is worth noting the changes represent Salesforce's first list price increases in seven years, in which time the company has delivered 22 product releases and thousands of new features and enhancements, including generative AI-related developments," Truist analyst Terry Tillman said in a note to clients.
He added that other software makers may also hike prices.
"We think the increases are well-justified and it will be interesting to watch whether similar pricing dynamics unfold in the application software complex more broadly," Tillman said.
Meanwhile, Salesforce stock climbed 3.9% to close at 221.17 on the stock market today. With the gain, CRM stock has jumped 66% in 2023. Also, Salesforce holds an entry point of 225.10.
CRM Stock: Profit Margins Improving
The enterprise software maker has taken steps to improve profit margins amid pressure from activist investors. They include Elliott Management, Starboard Value, Third Point, ValueAct Capital and Inclusive Capital.
In addition, Salesforce in January said it would cut 10% of its workforce and reduce office space as part of a restructuring plan.
According to IBD Stock Checkup, CRM stock currently has a Relative Strength Rating of 88 out of a best-possible 99. The best stocks tend to have ratings of 80 and above.
However, CRM stock has an Accumulation/Distribution Rating of D.
The rating analyzes price and volume changes in a stock over the past 13 weeks of trading. The rating, on an A+ to E scale, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
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