Snowflake — Stock Performance, Technical View & Future Expectations
Hi everyone! I’m Andy from Tradematics. Let’s check out the recent performance & future expectations of Snowflake. The company performs a strong combination of scale & growth. Nevertheless, the stock is currently situated in consolidation for nearly half a year. Is Snowflake a solid deal worth a shot?
Snowflake reported its Q2 financials on August 24, 2022. The cloud computing company experiences great customer momentum with increasing product revenue with five quarters in a row. Snowflake also focuses on free cash flow generation.
Revenue*: $497 million — 82.7% up year-over-year
Gross Profit*: $324 million — up 95%
Production Gross Margin*: 75% non-GAAP
Net Loss*: $222.8 million
*three months ended July 31
Recent Performance
According to the Snowflake’s financials, the company has rather consumption business model. It drowns in net loss numbers for a several quarters in a row. Despite the fact, that Snowflake pulled off the largest initial public offering by a software company ever, raising $3.4 billion dollars in 2020, the software business is due the microeconomics insecurities out of favor. However, the revenue and profit shows a great performance. Snowflake’s financials stand on its margin, which is fantastic.
On November 7, shares lost 9% of its value. The technological sector goes through broad sector decline. The market is still in concern about the Federal Reserve’s position on interest rates and inflation. For companies like Snowflake, there is an important part of its business model, and that is acquisition of new partners. Due the economical situation, the software company struggles to find new partners to do business with, as the vast majority of other companies carefully handles its finances.
Stock Technical View
Snowflake is a company with a ticker SNOW, being publicly traded since September 2020. Since that time, the stock had a furious upward movement gaining almost 80% in 80 days. This gain was afterwards replaces with huge decline movement, when the stock lost over 50% and retraced to the original price level. Since May 2021 the price went up organically and firmly for half a year. The tempo was still until the price hit the resistance, which formed a while after IPO on almost $400 level - that also indicated the relative strength index (RSI), which got through the value of 70 pts, which meant the stock was overprices. Since the resistance bounce, the stock started its bearish session lasting seven months and the price went to all-time-low of $110.60 per share. The RSI had shown again, that it got underpriced, and support was probably formed.
The SNOW stock is currently traded for $147.69 per share and it’s stuck in consolidation for nearly six months. There are two possible outcomes right now. The stock might continue consolidating for a while and afterwards it might be possible to test the ATL support level. The second option will also most probably continue consolidating - the company does not expect any huge changes in the moment - and then it might break through the consolidation and the bullish season may start. Nevertheless, investors interested in Snowflake are waiting for an upcoming Q3 earnings conference call, which is set to November 30, 2022.
Snowflake’s Future
In spite of the stock nearly being in 52-week minimum, the 35 analysts forecast offer optimistic scenario high as $500 per share, which is 242% up. Majority of them advices to buy the stock as the prediction is heading up. This rating has held steady throughout November.
Snowflake is a business dealing with cloud computing and data. According to , the market has now valuation of 545.8 billion dollars, and the CAGR is almost 18%. Hence the projected valuation of this market in 2027 is expected to be nearly tripled. Increasing automation demand plays into Snowflake’s (and other Cloud companies) hands, as demanding companies need to for example, store huge amounts of data. Despite the fact, SNOW is now let’s say, trapped due the economical situation in current numbers, they are undoubtedly involved in business with great potential in the long term.
This has been Andy from Tradematics.com