Shares of Salesforce.com (CRM -1.91%) were down 3.6% today as of 11:50 a.m. EST. There was no specific financial news from the company to cause this drop, but ongoing market volatility has growth stocks in retreat once again.
The latest worry weighing on investors is geopolitical in nature, specifically the on-again off-again conflict brewing on the border between Russia and Ukraine. Today, it seems reports from a couple days ago that Russia was pulling troops off the border may not be true.
Of more specific investment importance, though, are interest rates. Minutes from the Federal Reserve's meeting in January were released yesterday, and indications still point at an interest rate hike in March, with perhaps a few more later in the year to combat inflation. Higher interest rates lower the present value of stocks, especially high-growth companies like Salesforce.
Since this interest rate hike cycle started hitting the news late in 2021, Salesforce shares have been in steady retreat. The stock is now down more than 30% from its all-time high.
Of chief concern now will be Salesforce's fourth-quarter earnings report, which it will release and discuss on March 1. At that time, the cloud computing pioneer will also provide updated guidance for the upcoming fiscal year.
During the Q3 update, CEO Marc Benioff and the top team said to expect fiscal 2022 (the 12 months that ended Jan. 31, 2022) revenue growth of 24%, and preliminary fiscal 2023 (the new fiscal year that just started) revenue growth of about 20%. Salesforce's adjusted operating margin is also expected to expand to 20% this year.
After the recent beatdown it's endured, Salesforce stock trades for 36 times trailing 12-month free cash flow.