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Why Stock Is Rising Today

By Chris Neiger – Dec 2, 2021 at 8:00AM

Key Points

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After yesterday's drop, some investors are rushing back to the tech stock.

What happened's (CRM 1.62%) share price was climbing today as investors started coming back to the tech stock following its nearly 11% drop yesterday. 

Salesforce's stock was up by 3.7% as of 12:16 p.m. ET. 

So what 

Salesforce investors had a rough day yesterday after the company announced its third-quarter fiscal 2022 results earlier in the week. The company put up strong figures in the quarter, but investors were disappointed with the company's forward guidance. 

A woman sitting at a desk.

Image source: Getty Images.

Salesforce's management said that earnings guidance for the fourth quarter would be between $0.72 and $0.73 per share, which was below analysts' consensus estimate of $0.81 per share.

Marc Benioff, Salesforce's CEO, said in a press release, "We delivered another phenomenal quarter, fueling strong revenue growth, margin and cash flow."

Even though revenue increased in the third quarter by 27% compared the year-ago quarter, investors latched on to the fact that the fourth-quarter earnings estimate was below some analysts' expectations and pushed Salesforce's stock down yesterday. 

After a significant share price drop, it's not uncommon for some investors to be drawn to a tech stock, thinking that the recent pullback is a new buying opportunity. That's likely what's happening with Salesforce's share price today. 

Now what 

Investors have had to be patient with Salesforce's stock recently. With its significant price drop earlier this week -- despite today's gains -- the stock hasn't kept pace with S&P 500's gains year to date. 

But long-term investors may want to focus on the company's strong revenue growth from the third quarter and its long-term opportunities from its purchase of Slack, instead of focusing too much on analysts' earnings estimates. 

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends The Motley Fool has a disclosure policy.

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