Snowflake: Peak Pessimism

Summary:

  • The streak of negative news continued at Snowflake after the company reported somewhat softer-than-expected FY25 Q2 results.
  • The bear thesis centered around increasing competitive threats, decreasing margins, slowing revenue growth, rich valuation, and high stock-based compensation gained significant traction recently.
  • I believe investors became overly pessimistic towards the company, disregarding its strong growth prospects and placing too much emphasis on not well-supported threats.
  • Current valuation levels reflect extreme pessimism, in my opinion, providing a good risk/reward opportunity for buying the shares at current levels.
Bear growling in cloudy sky

John M Lund Photography Inc

Introduction and Investment thesis

Snowflake (NYSE:SNOW) continued its streak of disappointing quarterly results as the shares of the Sridhar Ramaswamy led data cloud company tanked 15% following the FY25 Q2 earning release. Sentiment has already been negative going


Analyst’s Disclosure: I/we have a beneficial long position in the shares of SNOW either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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