Late last month, excitement about an activist shareholder’s involvement with the company was enough to give Salesforce (NYSE:CRM) stock a boost.

Yet in the past few weeks, matters far more pertinent to the near-term prospects of CRM stock have come back into focus. Worries about a likely 2023 recession, and its impact on enterprise IT spending, have come off the back burner.

With rising interest rates showing little sign of reversing course anytime soon, uncertainty about results in the coming quarters is again on the rise. That’s bad news, for anyone buying the CRM stock today in the hope of a fast recovery.

Instead, a further pullback (albeit a moderate one) appears more likely. With this, it’s still not an opportune time to add this beaten-down tech name to your portfolio.

CRM Stock Is Sinking Again

It’s safe to say the boom times for tech are over, at least for now. With the economic slowdown having a dramatic impact on companies across the tech sector, leading names in the industry, Salesforce included, have announced layoffs.

However, while this downsizing will enable CRM to ride out the in-progress downturn, the positives are likely to be far outweighed by reduced IT spending by its clients.

As a result, there’s renewed bearishness for CRM stock. Sell-side analysts like Monness Crespi Hardt’s Brian White, have downgraded the stock, citing the prospect of the enterprise IT sales slump continuing to get worse.

Investors seem to agree, given the stock’s noticeable drop on the heels of the downgrade.

Salesforce walked back guidance when it last reported results back in August.

The Sell-Off Could Continue

If Salesforce continues to walk back guidance, another moderate drop in price may lie ahead. CRM could easily re-hit its 52-week low ($136.04 per share), or even hit a new multi-year low, during this timeframe.

Salesforce shares could languish after finally hitting a bottom. If the downturn in enterprise IT carries on into 2024, the stock could deliver middling returns for over a year.

It wouldn’t be the first time. It’s worth mentioning that CRM traded sideways from late 2018, until early 2020 when the pandemic tailwinds sent it back into hyperdrive.

Sure, one can argue that the efforts from the above-mentioned activist (Starboard Value), could push for changes that help move the needle for CRM, independent of a software sector recovery. Then again, only time will tell whether Starboard makes headway.

The Verdict

I wouldn’t completely dismiss Starboard’s potential to be a long-term catalyst for the stock.

At the same time, though considering this activist’s position isn’t even large enough to warrant a 13-D filing (i.e. 5% or more of the company), Salesforce may feel little pressure to implement Starboard’s game plan.

For now, it’s best to assume a recovery will only happen when the downturn in enterprise IT spending fully plays out. With plenty of time until that happens, there’s no reason to rush into CRM stock today.

CRM stock earns a D rating in Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.