Shorting Salesforce Stock After Earnings

How to Short Salesforce (CRM) After Negative Earnings – A Tactical Approach

Most of you have heard the saying: the trend is your friend. The idea is simple—you want to go with the flow, ride the wave, and not fight against market momentum. A crucial aspect of this is understanding how stocks react after earnings rather than focusing solely on earnings beats or misses.

Many amateur traders make the mistake of placing too much weight on whether a company beats revenue and EPS estimates. However, research suggests that 80-90% of companies beat these expectations, making it a poor standalone metric for decision-making. Instead, seasoned traders pay close attention to price action following earnings because price is the ultimate truth machine. Price will set you free.

Salesforce Stock Post-Earnings Price Action: Key Observations

In the case of Salesforce (CRM), we have a critical technical level to consider—the VWAP from the previous earnings report at the end of 2023, which is represented by the purple line at $281.43. After hours, price declined sharply, piercing through this VWAP level before recovering slightly. Premarket trading indicates that CRM is currently down 4.67%, reinforcing the post-earnings bearish sentiment.

The key takeaway here is that the trend has shifted, and the objective is to find an optimal entry point to short the stock. However, unlike going long, where traders can aggressively enter at different levels, shorting requires a more precise approach—like a sniper, not a machine gun. Shorts need carefully timed entries, as markets generally trend higher over time, making short trades riskier but potentially more rewarding.

Historically, some of the most profitable trades in swing trading have come from well-executed short positions. When price declines, it tends to fall faster and more violently than it rises, creating high-probability setups for disciplined traders.

The Simple Short Trade Plan on Salesforce Stock Post Last Night’s Negative Earnings

Given the current market setup, the trade plan follows a structured TradeCompass approach, incorporating volume profile analysis and key price levels around the crucial $300 round number resistance. The price may or may not reach this level, but if it does, it presents a high-confidence short opportunity.

CRM Short Trade Plan – Post Earnings (Feb 28, 2025)

• Weighted Average Entry Price: $301.48
• Total Position Size: 600 shares (adjust position size accordingly)
• Full Position Stop Loss: $304.50
• Take Profit Level: $271.34
• Risk-Reward Ratio: 10:1 (Potential reward of $36,300 vs. max loss of $3,600)

Partial Profit Targets for Consideration

Taking partial profits at key levels ensures risk management and allows traders to secure gains along the way rather than hoping for a single large move. The example below illustrates selling 20% of the short position at each key target:

• The plan prioritizes scaling into the short position around $300 resistance and securing profits on the way down.
• If all five partial profit targets are hit, the total realized profit is optimized while maintaining risk control.

Final Thoughts

The post-earnings reaction in Salesforce (CRM) presents a high-probability short setup. However, the execution must be disciplined and strategic. We do not blindly short but instead look for localized retracements into resistance before initiating positions. This sniper-like precision ensures better trade execution and improved risk-reward dynamics.

Traders should also remember that no single move is guaranteed. Instead of relying on one major drop, partial profit-taking at key levels enhances the probability of securing returns while managing risk.

⚠️ Disclaimer: This is not financial advice. Trade at your own risk. For additional insights, visit ForexLive.com for professional market perspectives and analysis. Visit ForexLive.com for additional views.

This article was written by Itai Levitan at www.forexlive.com.