Downstream Merger Monday

Greer: And let's look at the market's reaction to this deal. Not uncommon in a deal like this, shares of Salesforce down around 4% at the time of our taping, Tableau up around 35%. What does that tell you as an investor?

Moser: It's a good deal for Tableau. I think shareholders ought to feel pretty good about that considering the business. It's one of those tech companies of this new age where they're growing their top line OK, but they're still not profitable. Who knows when they ever will be materially profitable. Now, it's not going to matter. On Salesforce's side, it's an all-stock deal. From that perspective, I actually like that move. Shares are trading at near all-time highs. So essentially, they're using those shares as a form of cheap currency, as opposed to levering up the balance sheet because it's a $15 [billion], $16 billion deal all things said so. Smart way on Benioff's part to manage the deal. The company, if you just look at their track record, they've got a very good track record of growing the business and doing smart things. And it does really operate on this idea that customer experience is going to overtake price and the product quality is really the key brand differentiator. I mean customer service now is just such a big deal. Customers are prioritizing that over price and quality in some cases. That's the idea behind the deal.

Flippen: Tableau isn't the only one that's up significantly today. A lot of Tableau's competitors like Domo and Alteryx, they're all up. And it's a sign to the industry that, hey, there's a lot of competitors in this space, but there's also a lot of demand from the bigger guys. Maybe this acquisition of a $10 billion company -- Tableau already being a huge, well established company, maybe it means even greater things for a lot of these smaller organizations. Actually, Joey, another analyst here at the Fool mentioned to me this morning, reminded me that back in 2016, there were actually those leaked documents from Salesforce, in which Tableau was one of the companies which they were apparently expressing an interest in acquiring. It didn't happen then. But it's clear that this has been on their minds for a while. I wouldn't be surprised if this isn't the last merger we see.

Moser: Salesforce is coming at this from a position of strength already. When you look at the worldwide customer relationship management application, revenue market share, these estimates come from IDC, but you're looking at Salesforce with 16.8% of that revenue share. The next closest is Oracle at 5.7%. I mean, Salesforce is the clear leader. And they've only separated that over time. They've only become more the leader over time. I think this does nothing but that make that gap even larger.

Greer: Okay, so, you're telling me if I'm a Salesforce shareholder, and my shares are down around 4% on this deal, I should not necessarily go out and just sell all my shares?

Moser: I definitely wouldn't. I would certainly consider this as potentially an opportunity to add to a position of a leading company in its field. I mean, that's very much the normal reaction, right? The acquirer, typically the stock gets punished. The acquiree, the stock typically reflects the premium that it's being bought out at. So there's nothing odd from that behavior. And really, I mean, again, look at Salesforce's track record. I mean, if you've been a shareholder of this business, you're very happy.

Greer: Beyond Meat reported better than expected earnings last Thursday, when we were having our annual Fool Fest. The stock shot up on the news. The good times keep coming for the plant-based not meat company. Beyond Meat shares up around 30% today. Over the last five days, shares up around 80%. Now, Emily, I'm not an analyst. Is that a bit frothy? I see 80% in five days, and I don't know about that.

Flippen: I definitely think it's a little bit frothy. But the market can stay irrational, if it is irrational, can say irrational for a long time. Investors can sometimes forget that. I'm not entirely surprised to see it up on a beat for earnings. However, when you look at the actual valuation of the company --

Greer: B-E-A-T, not B-E-E-T?

Flippen: [laughs] Right, although they do use beets in their product!

Greer: Is that true?

Flippen: Yes, it is. That's how they give it the red [color].

Greer: I love it. I used to eat beets from the jar when I was a kid. You ever eat those purple-y beets?

Moser: God, no.

Greer: God, they were so good!

Flippen: How old were you?

Greer: That was when I was seven or eight. I ate beets and deviled ham, pimento cheese ...

Moser: I remember in college, I wasn't in a fraternity, but my freshman year in college, I would see fraternities haze the pledges by forcing them to go to the salad bar and eat a bowl full of beets.

Flippen: And now Beyond Meat is taking beets, and people are paying a lot of money for them. Look how times have changed, right? When I look at Beyond Meat, I look at the industry. It's a $9 billion company, on $40 million of sales this quarter. It's obviously a frothy valuation. I think it's trading around 40X prices sales. To say it's expensive is not an understatement. But the reason why we're seeing it trade so much higher is simply because people don't really know how big the market is. This is a really new industry. It's not just comparing it to frozen vegetable patties in the freezer section. People say this has been around forever, it's not changing anything. I mean, the fact that Beyond Meat is building a brand and getting that brand next to actual meat products in the meat section of your grocery store, there's value in that. It'll be interesting to see if this is a permanent change to people's diets. I think if that is the case, this valuation is justified. Personally, I tend to think it's a little bit frothy. Last week, I actually put, call it a negative conviction here at The Motley Fool. That's our internal tracking system. I put a negative conviction in for Beyond Meat because I said to myself, there's no way this company can be higher than it already is. You know what? They proved me wrong. There's your note not to bet against the market sometimes.

Moser: But, in your defense, a very small time. Very small window there. I mean, speaking of that small window, I had a couple of good questions over this past week at Fool Fest in regard to stocks perhaps having a tough year, not performing as well as maybe the business was performing. It reminded me of a slide that we use occasionally when we're teaching a Fool School seminar. The point of it is to show that these one-year gaps, these little one year-windows, it doesn't always quite make sense. The example is 2008. When we look at Google, back then it was Google. In 2008, they grew their revenue a little bit more than 31%.