Salesforce Buys Tableau, Opens up a Potential Play

Last week was the best the market has been since November – all three major market averages gained around 4%.

It appeared like trade problems with Mexico and China were resolved, the Fed would soon cut interest rates and any threat of war with Iran was off the table.

But is that really the case?

Given the market’s reaction, you’d think so. But Nicholas Colas, co-founder of DateTrek Research said it best, “Happy markets don’t surge 2% in a day. Worried markets do.”

He’s right – and this leads us to the opportunity presented in Trade of the Day today…

On June 4, Canaccord Genuity upgraded (NSYE: CRM) to a “Buy” with a $175 price target. But this morning, Salesforce opened down $8 after announcing it’s buying Tableau for $15.7 billion in an all-stock deal.

This deal comes after Google just bought analytics startup Looker last week for $2.6 billion. Many consider Salesforce’s purchase of Tableau as an attempt to keep pace in the data visualization sector. To me, if Salesforce looked good to Canaccord Genuity at $160, then it should look even better around $155 today.

In many respects, is this down move today a gift?

Let’s examine…

line graph - daily

Investors will get 1.103 shares of Salesforce common stock for each Tableau Class A and Class B common stock they own. The two boards have already approved the deal.

This is a huge deal for Salesforce because analytics is the next big thing in the tech sector – and this diversifies the company’s software into this market. For instance, Tableau brings 86,000 business customers to the table, including Charles Schwab, Verizon, Southwest and Netflix.

Salesforce Chairman and co-CEO Marc Benioff said, “Tableau helps people see and understand data, and Salesforce helps people engage and understand customers. It’s truly the best of both worlds for our customers – bringing together two critical platforms that every customer needs to understand their world.”

Action Plan: An all-stock deal to acquire a company that represents the next phase of the technology advancement plan most certainly seems like a savvy, forward-thinking move by Salesforce. Be ready to buy Salesforce on a dip when the timing is right. We’ll be eyeing the company’s shares closely in The War Room!

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