While Snowflake is growing at a remarkable rate, the company does face a rising number of competitive threats from the likes of Amazon (NASDAQ: AMZN) Web Services’, Alphabet’s (NASDAQ: GOOGL) Google Cloud, and Microsoft’s (NASDAQ: MSFT) Azure. To a large extent, Snowflake’s shares have been pulled down along with other high valued, unprofitable tech stocks. When looking at the red ink and high valuation, it becomes easy to see why investors have been selling out of SNOW stock in recent months. That’s high when compared to a competitor such as Palantir (NYSE: PLTR) that trades at 16 times sales. While Snowflake’s valuation has come down nearly 30% so far in 2022, the stock still trades at a price-to-sales ratio of 51. While many on Wall Street dismiss Snowflake over its lack of profitability, other take issue with the company’s valuation. By most measures, Snowflake is firing on all cylinders. Perhaps more important, Snowflake has 184 customers paying at least $1 million a year, which is more than double the 77 such customers it had at the end of its last fiscal year. Snowflake now has nearly 6,000 paying customers, up more than 40% from a year earlier. The company guided for revenue this year of $1.8 billion to $1.9 billion, representing 66% year-over-year growth. For fiscal 2022, Snowflake reported a net loss of $680 million, roughly $140 million larger than the previous fiscal year. If there’s a knock on Snowflake, it is that the company is not yet profitable. The company also reported that it has $2.6 billion already booked in contracted future revenue, which puts investors’ minds at ease. 31 of this year, Snowflake reported $1.1 billion in revenue, which was 106% more than the previous year. In contrast, Snowflake has delivered stellar financial results.įor its fiscal year ended on Jan. However, Snowflake has distinguished itself from other tech companies that have come to market in the past few years with big promises and little else. ( And Buffett almost never gets in on an IPO, especially one by a technology company). It attracted some marquee interest, with legendary investor Warren Buffett getting in on the company’s market debut and purchasing more than six million shares of SNOW stock. The company’s initial public offering (IPO) in September 2020 was the biggest ever by a software company. We still believe the name is a top pick under our technology coverage.Snowflake has been a publicly traded company for less than two years. While these are passive tailwinds, we think Snowflake’s technical expertise and execution will make it more than just a passive beneficiary in the data management software space. Overall, we can’t stress enough to investors that Snowflake is extremely well-positioned to benefit from a world that is rapidly collecting more data, which requires a place to live, but also a playground like Snowflake’s to work with such data so as to extract more value. Shares have popped 7% upon results, inching the stock somewhat closer to our $231 fair value estimate, while still leaving room for ample upside as the stock remains in 4-star territory. Encouragingly though, full-year fiscal 2024 guidance was raised on the revenue and profitability front. Snowflake’s third quarter was a mixed one, in our view, as revenue came in above our expectations while the bottom line came in under, as we had rosier expectations than the market.
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