Salesforce.com (CRM) – Get salesforce.com, inc. Report rose this past week after the customer-relations-management software provider boosted its 2022 revenue guidance ahead of its annual investor day conference.
Looking into 2023, Salesforce initiated its revenue guide in the range of $31.65 billion to $31.8 billion, with a non-GAAP operating margin of around 20%, a 150 basis point improvement to its current 2022 forecast.
Jim Cramer said now that we have this kind of uptick in the market even though we’re still oversold it’s imperative that investors raise a little bit of cash.
Over on Real Money, Cramer says companies don’t become best-of-breed unless they are the best in everything they do. Facebook hangs in the balance. See what he says about Apple, Amazon, Google and Microsoft.
“I’m not saying we’re dangerously low on cash. We saw some vulnerabilities in our [Action Alerts PLUS] portfolio and we’re addressing those,” he said.
Since the company is a holding in the Action Alerts PLUS portfolio, here’s a sneak peek into their thoughts about the quarter: “We continue to believe the market is under-appreciating the Slack (WORK) – Get Slack Technologies, Inc. Class A Report” the AAP team wrote. “Even in a pandemic, Salesforce continues to consistently deliver 20% year-over-year sales growth and their industry-leading software is one of the biggest reasons why their customers have remained successful in a digital, work-from-anywhere environment.”
Cramer also suggested it was time to do some profit-taking in business software provider Salesforce after it raised its full-year 2022 revenue guidance to between $26.25 billion and $26.35 billion.
“Marc Benioff, when he buys companies, is immediately derived into something that’s destined for organic growth. If you have margins that are going up like this, that means you’re not desperate for organic growth. It means you’re making acquisitions that are complementary to your current business, which is what he does,” said Cramer.
Cramer also recently commented that as interest rates increase, investors are shifting from technology stocks to the banks, oils, industrials and travel and leisure names.
“We happen to own a lot of the big technology stocks, but we are buying the companies that are involved with growth…we’re pivoting in order to be equal to this…but, one of the things you don’t do is back away from Amazon (AMZN) – Get Amazon.com, Inc. Report because of an earnings note from Morgan Stanley. There is nothing in the Amazon story that tells me that they will have higher costs because that is a company that is built on the notion that they can get anything down in cost by using automation,” he said.
“I also think Microsoft (MSFT) – Get Microsoft Corporation (MSFT) Report is doing terrifically. But, Facebook is the one I’m worried about. The reason I’m worried about Facebook…we don’t own much Facebook… is because I think people are fed up,” he added.
Shares of Facebook (FB) – Get Facebook, Inc. Class A Report edged lower after its Instagram photo-and-video-sharing app said it would pause work on Instagram for kids. The move comes weeks after internal documents showed the social-media company knew about the app’s negative effects on young girls.
“There will be a momentary hit…why did they blink on Instagram for kids? I think they blinked because they’re getting bad feedback from advertisers. I do feel like if it weren’t selling for 25 times your earnings then I would just take that profit,” said Cramer.
Instagram Chief Executive Adam Mosseri made the announcement on his Instagram account after discussing the matter on NBC’s Today Show.
“We’re going to take the time to talk more to and listen to more parents, researchers and safety experts and to get to some more consensus before we move forward,” Mosseri said in a short video posted to his Instagram account.
However, Mosseri also said that the company believes building Instagram Kids is the right thing to do. “It’s better for parents to have the option to give their tweens a version of Instagram that’s designed to be safe for them,” he added.
Earlier this month, an investigation by The Wall Street Journal prompted lawmakers to launch a formal probe into this matter.
“Thirty-two percent of teen girls said that when they felt bad about their bodies, Instagram made them feel worse,” the researchers at Facebook reportedly wrote.
The Journal cited internal Facebook studies over the past three years that examined how Instagram affects its young user base, with teenage girls being most notably harmed. The tech giant identified Instagram’s Explore page as a place that can push users into content that can be harmful.
According to one slide from 2019, reportedly seen by the Journal, researchers concluded, “we make body image issues worse for one in three teen girls.”
Here is a breakdown list of the technology and FAANG stocks to watch right now based on their performance over the past week:
Parus Holdings on Friday filed a second patent infringement lawsuit against Apple (AAPL) – Get Apple Inc. (AAPL) Report, alleging that the giant tech company infringed on its patents for voice-browsing and device control technology. Parus filed the lawsuit against Apple in the U.S. District Court for the Western District of Texas alleging that the computer company infringed on its U.S. Patent Nos. 6,721,705 and 8,185,402 for voice-browsing and device control technology.
The Chicago-based plaintiff is seeking all available remedies, including damages against Apple for all of its infringing sales, according to a Friday statement. The lawsuit alleged that the infringement has been “willful,” and requests that Apple be ordered to pay treble damages and Parus’ attorneys’ fees and be permanently enjoined from infringing the plaintiff’s patents.
TheStreet Quant Ratings rates Apple as a Buy with a rating score of A.
Get more trading strategies and investing insights from the contributors on Real Money.
Shares of Salesforce.com are consistently higher after the customer-relationship-management-software group boosted its 2022 revenue guidance and analysts upgraded the company. The company held its annual investor conference this past week.
Analysts at Morgan Stanley maintained their overweight rating while raising their price target on the shares to $345 from $305, analysts at KeyBanc maintained their overweight rating while raising the price target to $345 from $335, analysts at Oppenheimer maintained their outperform rating while raising their price target to $310 from $290, and analysts at JPMorgan raised their price target to $316 a share from $310 while maintaining an overweight rating.
TheStreet Quant Ratings rates Salesforce as a Buy with a rating score of B.
Zoom Video Communications
The Justice Department is leading an investigation into Zoom Video Communications (ZM) – Get Zoom Video Communications (ZM) Report and its deal to buy Five9 (FIVN) – Get Five9 Inc. Report for $15 billion due to potential national security risks posed by the company’s ties to China.
Though Zoom is an American company, the DOJ requested that an interagency committee, known as the Committee for the Assessment of Foreign Participation in the U.S. Telecommunications Service Sector, review a license application to see if the deal “poses a risk to national security or law enforcement interest,” a letter posted on the Federal Communications Commission’s website said. Zoom Video expects to receive regulatory approvals by the first half of next year, leaving the deal on track to close as originally intended.
“Five9 doesn’t pose any security risk. There are a lot of people who feel that Zoom should get all servers out of China, but you can opt out of having your information hosted in China. My stepson works for Zoom and I have tremendous confidence that if you wanted to make it so that the Chinese government didn’t see your stuff they couldn’t, but I understand how the justice department could say that as long as he [Eric Yuan] has servers in China he could leak it. I think it’s unfair,” said Cramer.
The Street Quant Ratings rates Zoom Video Communications as a Sell with a rating score of D+.
Shares of BlackBerry (BB) – Get BlackBerry Limited Report jumped after the security software and services company reported fiscal-second-quarter results ahead of analyst expectations amid an uptick in demand and a move to the cloud. The company says it has scored design wins with 24 of the world’s leading 25 electric-vehicle makers and maintained its full-year revenue outlook of between $495 million and $515 million.
For the quarter ended Aug. 31, the company’s net loss widened to $144 million, or 25 cents a share, from $23 million, or 4 cents a share, in the year-earlier quarter. BlackBerry reported an adjusted loss of 6 cents a share, stronger than analyst expectations –derived from a FactSet survey — of a loss of 10 cents a share. Revenue fell to $223 million from $357 million a year earlier but topped analyst expectations of $202.6 million, according to FactSet.
The Street Quant Ratings rates Blackberry as a Sell with a rating score of D.
Software giant Microsoft increased its quarterly dividend by 11% recently, which sounded like a large boon for investors. The catch is that the company’s current dividend is not high compared to other stocks since it used to pay only $0.56. An increase of $0.06 yields an 11% increase and now Microsoft pays $0.62 per share for a forward yield of 0.83%. The company is also conducting a new share repurchase authorization for a maximum of $60 billion in common stock.
Microsoft reports its fiscal first-quarter financial performance in October. The Wall Street earnings per share (EPS) estimates are $2.07 on revenue of $44 billion. This would amount to earnings growth of 13.7% and revenue growth of 23.2%.
The Street Quant Ratings rates Microsoft as a Buy with a rating score of A.
Facebook Chief Technology Officer Mike Schroepfer has informed the company that he plans to resign from his position after a transition period. The company said it will replace Schroepfer with its head of Facebook Reality Labs Andrew Bosworth, according to a company statement.
The giant social media company in a Securities and Exchange Commission Form 8-K filing announced that Schroepfer was leaving the company but that the effective date of the transition and compensation terms of the arrangement had not been determined.
Facebook CEO Mark Zuckerberg said in the statement that the transition to Bosworth’s appointment to CTO would occur sometime next year. Schroepfer will transition to become the company’s first senior fellow.
TheStreet Quant Ratings rates Facebook as a Buy with a rating score of A.
Morgan Stanley cut its price target for Amazon 4.7%, to $4,100 from $4,300, predicting that the online retail major’s hiring binge and wage increases for its logistics staff will hurt profit. “Our analysis of AMZN’s 700,000 person U.S. logistics workforce and rising wages reveals more profit pressure ahead, as we lower our 2021/2022 earnings-before-interest forecast by 16%-19%,” wrote Morgan Stanley analyst Brian Nowak. He kept his rating at overweight.
Whole Foods Market is ending free deliveries for Amazon Prime members, as it will add a service fee beginning in October. Amazon this past week Friday notified its Amazon Prime members that starting Oct. 25 it will charge a $9.95 service fee for Whole Foods delivery orders. Customers will also pay additional rush order fees for one-hour deliveries. Grocery pickup will still be free for Prime members on orders over $35.
Seattle-based Amazon has gained 12% over the past six months.
TheStreet Quant Ratings rates Amazon as a Buy with a rating score of B.
Alphabet’s Google (GOOGL) – Get Alphabet Inc. Class A Report has announced that it is buying the St. John’s Terminal building that it has been leasing from Oxford Properties. The purchase stems from an option that Google is exercising and significantly expands its New York City footprint. The deal for 2.1 billion adds to the $55.9 billion of parent company Alphabet’s real estate holdings including several buildings in downtown Manhattan.
The purchase of the St. John’s Terminal building is a positive sign for New York and Google’s investment in the city. Google currently employs approximately 12,000 New Yorkers and plans to add an additional 2000 in the next few years.
TheStreet Quant Ratings rates Alphabet as a Buy with a rating score of A.
Streaming entertainment titan Netflix (NFLX) – Get Netflix, Inc. (NFLX) Report is buying Roald Dahl Story Co., the company that manages the rights to the British author Roald Dahl’s characters, including Willy Wonka, Matilda and The BFG. Terms weren’t disclosed.
“This acquisition builds on the partnership we started three years ago to create a slate of animated TV series,” Netflix, Los Gatos, Calif., said in a statement. “For example, Academy Award-winning filmmaker Taika Waititi and Academy Award nominee Phil Johnston are now hard at work on a series based on the world of Charlie and the Chocolate Factory.”
This “opened our eyes to a much more ambitious venture — the creation of a unique universe across animated and live-action films and TV, publishing, games, immersive experiences, live theatre, consumer products and more,” Netflix said.
The Street Quant Ratings rates Netflix as a Buy with a rating score of B.