Salesforce.com (CRM) Conference Moves Stock 9.18.2012

Aside from the headliners, CRM is expected to launch a wealth of products onto to cloud community. CRM may update their Dropbox type application, similar to GOOG’s Drive. Chatterbox users can save and access files form any linked device, basically it is a collaboration tool for the enterprise. Work.com is also expected to be launched. “Work” will be a more human resources centric application based upon contact management needs. According to reports, this CRM tool will remember information about a contact, anything from Twitter handles to e-mail.

With all these cool services it is hard to stay impartial and only focus on the material items. Since 2006, below is an aggregation of past returns of CRM during the Dreamforce conference.  The figures were calculated buying the open of the first date and selling the close of the closing conference date.

 The conference starts today and ends Friday the 21st, and with that in mind the September options seem to be pricing in a mediocre move.  Considering the close on Monday CRM was $158.17/share and the ATM $160 straddle was selling for $5.68 or 3.6% of the stock. Since 2006 there was only one conference that had a move of that kind of magnitude.  The 2010 conference may have caused CRM to surge 3.13%; or did it? The SPY in that time period rallied 0.9% and then beta adjusting CRM for that market move…CRM actually outperformed the market, assuming a 1.4 beta. It can be argued that the outperformance was due to the conference.

According to CRM’s CEO Benioff, “We are not trying to snuff competitors out.” Even thought they seem to be doing a good job of that, for the market is assigning CRM a lofty multiple of 100X TTM. Considering the former, short interest, as last reported on 9/01/12, was about 10% of the CRM float.  The analyst community also sees blue skies head for the cloud provider…33 of the 40 analysts that cover the stock have buy or better on it. The average target for CRM is $170. 

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Data courtesy of Thinkorswim