CRM - Snowflake: Time To Load Up The Truck

2024-06-29 11:36:26 ET

Summary

• Snowflake is seeing selling pressure in FY 2024 despite the cloud platform seeing strong top line growth and a 1 PP revenue acceleration in FQ1'25.
• The company's net losses are a concern, but free cash flow remains strong, with a 40% margin in the last quarter.
• Relatively new and evolving product offers like Snowflake Cortex AI make the Snowflake platform more attractive to enterprise customers.
• Snowflake's valuation is currently a bargain, with a 53% discount to its historical price-to-revenue ratio.

Since the company's earnings report at the end of May, Snowflake ( SNOW ) has seen serious pricing weakness, although the earnings report was quite solid. The data cloud service provider generated very strong top line growth, saw a sequential revenue acceleration and raised its guidance for full-year revenues. Nonetheless, the company’s shares fell to a new 1-year low in June on concerns over profitability. I believe investors are massively overreacting to the company’s earnings report and I think the excessive drop this year is a golden opportunity for investors to load up the truck!...

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