SNOW - Snowflake Q1 2025 Earnings: High Valuation And Decelerating Growth? I'll Pass

2024-05-23 03:55:27 ET

Summary

• Snowflake's stock is considered overpriced at 45x forward free cash flow, already factoring in the best-case growth scenario.
• Growth rates are decelerating, and customer adoption is flattening out.
• Increasing costs of AI initiatives are putting pressure on free cash flow margins.

Investment Thesis

Snowflake ( SNOW ) continues to be richly priced for what it offers investors. I believe that Snowflake at 45x forward free cash flow is already pricing in the best-case scenario.

Or perhaps, better put, I can understand why investors that are long this stock may continue to buy more of a stock with such an alluring narrative on Wall Street, but for new investors looking at the stock with fresh new capital, I do not see the appeal....

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