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It's been a pretty tepid year for
CRM). Shares of the $26 billion enterprise software company have only climbed 7% so far in 2013, falling well short of the
S&P 500's hefty 15% return year-to-date. That underperformance is attracting short sellers this quarter, as Salesforce climbs up investors' hate list. At last count, the firm's short interest ratio rang in at 10.82, indicating that it would take more than two weeks of selling for shorts to exit their bets against CRM.
Salesforce.com makes a must-have application for its 100,000 customers. The firm's Web application lets users run business applications that interact with their customer lists, handling everything from sending newsletters to tracking sales. The Salesforce.com platform has a direct, measurable correlation to sales -- and that mission-critical nature of CRM's offering is digs a big economic moat for the firm.
Because CRM sells its software as a service hosted in "the cloud" rather than an application hosted on users' computers, it boasts an attractive subscription-based model. As a result, customers tend to be stickier because they've invested in the firm's platform; because integration takes place deep in the Salesforce platform, switching costs are extremely high for customers.
Earnings at the end of the month could be a big catalyst for this stock to get squeezed. Keep an eye on it.
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