What Does Missionforce Mean for Salesforce Stock After 26% Drop in 2025?

Wondering what to do with Salesforce stock after its latest swings? You are not alone. Whether you have held on through the rollercoaster or are eyeing a fresh buy, Salesforce keeps sparking conversation. The stock closed at $244.56 last session, fresh off a 2.2% gain for the week, but still carrying the sting of a 26.0% drop year-to-date. That sort of volatility always grabs attention, and it is no coincidence as there have been some headline-making changes.

In just the past few weeks, Salesforce announced a splashy new AI-driven business unit called Missionforce aimed at reshaping defense workflows. The company also made waves by significantly reducing its customer support staff and leaning further into AI agents for service, sending signals about bold shifts in business strategy and cost structure. Add in speculation about Salesforce jumping into big-ticket investments and possible fresh government contracts, and suddenly the long-term growth story is back in the spotlight, despite some near-term jitters and even a recent analyst price target trim.

So what does all this mean for valuation? By the numbers, Salesforce is undervalued in 4 of 6 key valuation checks, giving it a value score of 4. That is a strong showing, but as always with a stock like this, the real story is in the details. Next, we will break down exactly how those valuation checks stack up, and stick around because we will end with a smarter way to think about Salesforce’s true worth.

Why Salesforce is lagging behind its peers

Approach 1: Salesforce Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s value by projecting its future cash generation and discounting those flows back to today’s dollars. This approach gives investors a sense of what the stock could be worth based on expected business performance, rather than just recent market prices.

For Salesforce, the current Free Cash Flow (FCF) is $12.4 Billion. Analysts forecast strong growth, estimating that by 2030, annual FCF could reach $17.0 Billion. Although analyst forecasts cover the next five years, projections beyond that are extrapolated to account for the company’s potential in various scenarios. These forward-looking figures help capture Salesforce’s long runway for expanding its business and continued push into new AI-driven markets.

After running these projections through the DCF model, the fair value for Salesforce is $281.02 per share. With the stock last closing at $244.56, this suggests Salesforce is trading at a 13.0% discount to its intrinsic value, which indicates it is undervalued based on cash flow fundamentals.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Salesforce.

Our Discounted Cash Flow (DCF) analysis suggests Salesforce is undervalued by 13.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Salesforce Price vs Earnings

For companies like Salesforce that are consistently profitable, the Price-to-Earnings (PE) ratio is a go-to tool for valuation. The PE ratio gives investors a quick look at how the stock's price compares to its earnings power, making it especially useful when companies are generating solid and stable profits.

A "normal" PE ratio is shaped by market expectations for growth and the risks the company faces. Higher growth prospects and lower risk usually justify a higher multiple, while sluggish growth or bigger risks will push that number down. Salesforce currently trades at a 34.9x PE ratio, which is just below the software industry average of 36.2x and well below the peer average of 64.7x. This suggests investors are assigning a slightly lower premium to Salesforce compared to its immediate competitors, perhaps reflecting more measured growth expectations or perceived risks.

Simply Wall St's proprietary Fair Ratio for Salesforce is 44.6x, which is higher than both its actual PE and the industry average. The Fair Ratio stands out because it factors in a broader view: not just how the company compares to its peers or the broader industry, but also its own earnings growth, profit margins, market cap, and specific risks. That makes it a more holistic benchmark for evaluating whether Salesforce is truly cheap or expensive at its current price.

Since Salesforce's PE of 34.9x is meaningfully below its Fair Ratio of 44.6x, the numbers indicate the stock is undervalued by this key metric.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Salesforce Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is a simple but powerful tool that lets you connect your own perspective on a company with transparent financial forecasts and an estimated fair value. Essentially, it is your story behind the numbers.

Narratives help bridge the gap between what you believe about Salesforce’s future and the numbers that drive valuation. You set your own assumptions for future revenue growth, margins, or risk, and instantly see how your unique view stacks up against the current share price. It is as easy as picking your scenario and seeing the math play out, with no spreadsheet required, directly on Simply Wall St's Community page, where millions of investors are already testing and sharing their ideas.

The value of Narratives is that they update dynamically whenever new information comes in, like fresh news or earnings, so your conclusions always stay relevant. Investors use Narratives to decide when to buy or sell. For example, if you believe in the optimistic analyst forecast for Salesforce, expecting revenues of $51.9 billion, margins near 20%, and assigning a 39x PE, you might see a fair value as high as $430 per share, while a more cautious outlook could suggest a fair value closer to $221.

For Salesforce, we’ll make it really easy for you with previews of two leading Salesforce Narratives:

🐂 Salesforce Bull Case

Fair Value: $334.68

Currently 26.9% undervalued versus last close

Revenue Growth Forecast: 9.6%

• AI automation and workflow integration are driving customer adoption and boosting margins, setting the stage for sustainable growth.
• Salesforce’s disciplined expansion into mid-market and SMB segments, supported by strong cash generation and buybacks, is broadening its growth foundation.
• Key risks include regulatory headwinds, integration challenges from acquisitions, and intensifying competition from tech giants that are bundling similar solutions.

🐻 Salesforce Bear Case

Fair Value: $223.99

Currently 9.2% overvalued versus last close

Revenue Growth Forecast: 13%

• Salesforce is solidifying enterprise leadership, but much of the efficiency gains are already priced in and future growth may be constrained by market saturation.
• The company’s revenue remains concentrated among large enterprise customers, making it vulnerable if diversification stalls and macro conditions tighten.
• Heavy investment in acquisitions and ambitious AI projects could pressure free cash flow, and the market may be overestimating future profitability and growth potential.

Do you think there's more to the story for Salesforce? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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