Is Snowflake a Buy After Its Stock Soared 30%?

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Is Snowflake a Buy After Its Stock Soared 30%?

Motley Fool2024-12-01

Snowflake saw its shares rise after a solid Q3 report.The company recently announced a key AI partnership.Snowflake's growth rate isn't quick enough to pull it out of its deep losses.Snowflake isn't ...

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Roy ong and Motorless are gay boy
·2024-12-01
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The stock is down 12% in 2024, by far underperforming major indices. But it used to be much worse. Snowflake stock is actually up big in the last month after it reported blowout figures for its third quarter of fiscal year 2025 (ending Oct. 31). After that report, the stock surged over 30% the following trading day.Some may view that as missing the move, as it was an enormous rise in just one day. However, there are signs that this could be a long-term trend for Snowflake. But is it enough to make it a buy now?Snowflake's data cloud is still seeing strength as AI booms in popularitySnowflake is all about data. Its data cloud product provides its customers with the infrastructure to help manage data collection, storage, and processing. This is incredibly important right now, as this data is becoming key to training artificial intelligence (AI) models.To help bolster its AI prowess, Snowflake partnered with Anthropic to bring its Claude model onto the Snowflake platform through Amazon Web Services (AWS). This partnership is significant in a world where every company is trying to see how AI benefits its business. With Snowflake's massive customer base of over 10,000 clients, it already has a strong relationship with many customers and could see more revenue come from each of those customers with the Anthropic partnership.In Q3 FY 2025, product revenue rose 29% year over year to $900 million. That's an impressive figure -- and doesn't even reflect any gains to come from the Anthropic partnership. But there is one figure that really blew investors' minds. Snowflake's remaining performance obligations (RPO) measure how much revenue is yet to be realized from signed contracts. Its RPO rose 55% to $5.7 billion, meaning its growth rate should stay elevated longer than most investors were expecting.This metric caused Snowflake's stock to rise, and for good reason. However, a few other sticking points with Snowflake may cause investors to reconsider.Snowflake's profits are nowhere to be seenEven with the bump in RPO, Snowflake's growth is slowing. In Q4, management expects product revenue growth of 23%. This is a continuation of a trend of a business whose growth is slowing as the company becomes more mature.SNOW Operating Revenue (Quarterly YoY Growth) data by YChartsThe problem is that Snowflake is acting like a company whose growth is accelerating. Snowflake's main problem lies with its operating expenses, as it posted an operating loss of $366 million in the quarter -- a 39% loss margin. Despite Snowflake's slowing growth, this margin hasn't changed at all over the past few years.SNOW Operating Margin (Quarterly) data by YChartsThis is a huge problem, as Snowflake is starting to lose the growth it needs to become profitable. Instead, it will likely have to make drastic compensation cuts to achieve this goal.The lack of emphasis on profitability with slowing growth is a huge red flag for me, as it shows that the management team places hardly any value on profits -- which isn't good for shareholders. While this doesn't doom Snowflake by any means, it reshapes Snowflake's investment picture.Although I currently own shares of Snowflake, I may use this bump as an opportunity to exit the stock or at least reduce my exposure to it. High-growth software companies eventually need to turn a profit, and with Snowflake still trading at a premium valuation (17 times sales), it may be time to move on. Many other high-growth software companies are generating strong profits, and there's no reason why Snowflake can't follow their model.","kind":"highlight","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"dataReport","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":377028066754808,"gmtCreate":1733050758494,"gmtModify":1733050762259,"author":{"id":"4192641781859792","authorId":"4192641781859792","name":"Roy ong and Motorless are gay boy","avatar":"https://community-static.tradeup.com/news/default-avatar.jpg","vip":1,"crmLevel":1,"crmLevelSwitch":1,"idStr":"4192641781859792","authorIdStr":"4192641781859792"},"htmlText":"👎 👎 👎 👎 👎 👎 👎 👎 👎 👎 👎 👎 👎 👎 👎&nbsp;","listText":"👎 👎 👎 👎 👎 👎 👎 👎 👎 👎 👎 👎 👎 👎 👎&nbsp;","text":"👎 👎 👎 👎 👎 👎 👎 👎 👎 👎 👎 👎 👎 👎 👎","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/377028066754808","repostId":2487579507,"repostType":4,"repost":{"id":"2487579507","kind":"highlight","pubTimestamp":1733025600,"share":"https://ttm.financial/m/news/2487579507?lang=&edition=fundamental","pubTime":"2024-12-01 12:00","market":"us","language":"en","title":"Is Snowflake a Buy After Its Stock Soared 30%?","url":"https://stock-news.laohu8.com/highlight/detail?id=2487579507","media":"Motley Fool","summary":"Snowflake saw its shares rise after a solid Q3 report.The company recently announced a key AI partnership.Snowflake's growth rate isn't quick enough to pull it out of its deep losses.Snowflake  isn't having the best of years. The stock is down 11% in 2024, by far underperforming major indices. But it used to be much worse. Snowflake stock is actually up big in the last month after it reported blowout figures for its third quarter of fiscal year 2025 . After that report, the stock surged over 30% the following trading day.Some may view that as missing the move, as it was an enormous rise in just one day. However, there are signs that this could be a long-term trend for Snowflake. But is it enough to make it a buy now?","content":"<html><head></head><body><ul style=\"\"><li><p><a href=\"https://laohu8.com/S/SNOW\">Snowflake</a> saw its shares rise after a solid Q3 report.</p></li><li><p>The company recently announced a key AI partnership.</p></li><li><p>Snowflake&#39;s growth rate isn&#39;t quick enough to pull it out of its deep losses.</p></li></ul><p><strong>Snowflake </strong>isn&#39;t having the best of years. The stock is down 12% in 2024, by far underperforming major indices. But it used to be much worse. Snowflake stock is actually up big in the last month after it reported blowout figures for its third quarter of fiscal year 2025 (ending Oct. 31). After that report, the stock surged over 30% the following trading day.</p><p>Some may view that as missing the move, as it was an enormous rise in just one day. However, there are signs that this could be a long-term trend for Snowflake. But is it enough to make it a buy now?</p><h2 id=\"id_682441805\">Snowflake&#39;s data cloud is still seeing strength as AI booms in popularity</h2><p>Snowflake is all about data. Its data cloud product provides its customers with the infrastructure to help manage data collection, storage, and processing. This is incredibly important right now, as this data is becoming key to training artificial intelligence (AI) models.</p><p>To help bolster its AI prowess, Snowflake partnered with Anthropic to bring its Claude model onto the Snowflake platform through <strong>Amazon </strong>Web Services (AWS). This partnership is significant in a world where every company is trying to see how AI benefits its business. With Snowflake&#39;s massive customer base of over 10,000 clients, it already has a strong relationship with many customers and could see more revenue come from each of those customers with the Anthropic partnership.</p><p>In Q3 FY 2025, product revenue rose 29% year over year to $900 million. That&#39;s an impressive figure -- and doesn&#39;t even reflect any gains to come from the Anthropic partnership. But there is one figure that really blew investors&#39; minds. Snowflake&#39;s remaining performance obligations (RPO) measure how much revenue is yet to be realized from signed contracts. Its RPO rose 55% to $5.7 billion, meaning its growth rate should stay elevated longer than most investors were expecting.</p><p>This metric caused Snowflake&#39;s stock to rise, and for good reason. However, a few other sticking points with Snowflake may cause investors to reconsider.</p><h2 id=\"id_3966197648\">Snowflake&#39;s profits are nowhere to be seen</h2><p>Even with the bump in RPO, Snowflake&#39;s growth is slowing. In Q4, management expects product revenue growth of 23%. This is a continuation of a trend of a business whose growth is slowing as the company becomes more mature.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/cb6ffb64c33e621717613e0d56d4eee0\" alt=\"SNOW Operating Revenue (Quarterly YoY Growth) data by YCharts\" title=\"SNOW Operating Revenue (Quarterly YoY Growth) data by YCharts\" tg-width=\"720\" tg-height=\"441\"/><span>SNOW Operating Revenue (Quarterly YoY Growth) data by YCharts</span></p><p>The problem is that Snowflake is acting like a company whose growth is accelerating. Snowflake&#39;s main problem lies with its operating expenses, as it posted an operating loss of $366 million in the quarter -- a 39% loss margin. Despite Snowflake&#39;s slowing growth, this margin hasn&#39;t changed at all over the past few years.</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/6dab5e8eb12b2571bcd43bd9b0fa6b5c\" alt=\"SNOW Operating Margin (Quarterly) data by YCharts\" title=\"SNOW Operating Margin (Quarterly) data by YCharts\" tg-width=\"720\" tg-height=\"441\"/><span>SNOW Operating Margin (Quarterly) data by YCharts</span></p><p>This is a huge problem, as Snowflake is starting to lose the growth it needs to become profitable. Instead, it will likely have to make drastic compensation cuts to achieve this goal.</p><p>The lack of emphasis on profitability with slowing growth is a huge red flag for me, as it shows that the management team places hardly any value on profits -- which isn&#39;t good for shareholders. While this doesn&#39;t doom Snowflake by any means, it reshapes Snowflake&#39;s investment picture.</p><p>Although I currently own shares of Snowflake, I may use this bump as an opportunity to exit the stock or at least reduce my exposure to it. High-growth software companies eventually need to turn a profit, and with Snowflake still trading at a premium valuation (17 times sales), it may be time to move on. Many other high-growth software companies are generating strong profits, and there&#39;s no reason why Snowflake can&#39;t follow their model.</p></body></html>","source":"fool_stock","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Is Snowflake a Buy After Its Stock Soared 30%?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIs Snowflake a Buy After Its Stock Soared 30%?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-01 12:00 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2024/11/30/is-snowflake-a-buy-after-its-stock-soared-30/><strong>Motley Fool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Snowflake saw its shares rise after a solid Q3 report.The company recently announced a key AI partnership.Snowflake's growth rate isn't quick enough to pull it out of its deep losses.Snowflake isn't ...</p>\n\n<a href=\"https://www.fool.com/investing/2024/11/30/is-snowflake-a-buy-after-its-stock-soared-30/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"LU0889565833.HKD":"FRANKLIN TECHNOLOGY \"A\" (HKD) ACC","LU1803068979.SGD":"FTIF - Franklin Technology A (acc) SGD-H1","BK4535":"淡马锡持仓","BK4559":"巴菲特持仓","BK4588":"碎股","LU0109392836.USD":"富兰克林科技股A","BK4116":"互联网服务与基础架构","BK4503":"景林资产持仓","BK4551":"寇图资本持仓","BK4505":"高瓴资本持仓","BK4581":"高盛持仓","LU1951198990.SGD":"Natixis Thematics AI & Robotics Fund H-R/A SGD-H","BK4548":"巴美列捷福持仓","LU1951200564.SGD":"Natixis Thematics AI & Robotics Fund R/A SGD","LU1923623000.USD":"Natixis Thematics AI & Robotics Fund R/A USD","BK4554":"元宇宙及AR概念","BK4532":"文艺复兴科技持仓","SNOW":"Snowflake","BK4585":"ETF&股票定投概念"},"source_url":"https://www.fool.com/investing/2024/11/30/is-snowflake-a-buy-after-its-stock-soared-30/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2487579507","content_text":"Snowflake saw its shares rise after a solid Q3 report.The company recently announced a key AI partnership.Snowflake's growth rate isn't quick enough to pull it out of its deep losses.Snowflake isn't having the best of years. The stock is down 12% in 2024, by far underperforming major indices. But it used to be much worse. Snowflake stock is actually up big in the last month after it reported blowout figures for its third quarter of fiscal year 2025 (ending Oct. 31). After that report, the stock surged over 30% the following trading day.Some may view that as missing the move, as it was an enormous rise in just one day. However, there are signs that this could be a long-term trend for Snowflake. But is it enough to make it a buy now?Snowflake's data cloud is still seeing strength as AI booms in popularitySnowflake is all about data. Its data cloud product provides its customers with the infrastructure to help manage data collection, storage, and processing. This is incredibly important right now, as this data is becoming key to training artificial intelligence (AI) models.To help bolster its AI prowess, Snowflake partnered with Anthropic to bring its Claude model onto the Snowflake platform through Amazon Web Services (AWS). This partnership is significant in a world where every company is trying to see how AI benefits its business. With Snowflake's massive customer base of over 10,000 clients, it already has a strong relationship with many customers and could see more revenue come from each of those customers with the Anthropic partnership.In Q3 FY 2025, product revenue rose 29% year over year to $900 million. That's an impressive figure -- and doesn't even reflect any gains to come from the Anthropic partnership. But there is one figure that really blew investors' minds. Snowflake's remaining performance obligations (RPO) measure how much revenue is yet to be realized from signed contracts. Its RPO rose 55% to $5.7 billion, meaning its growth rate should stay elevated longer than most investors were expecting.This metric caused Snowflake's stock to rise, and for good reason. However, a few other sticking points with Snowflake may cause investors to reconsider.Snowflake's profits are nowhere to be seenEven with the bump in RPO, Snowflake's growth is slowing. In Q4, management expects product revenue growth of 23%. This is a continuation of a trend of a business whose growth is slowing as the company becomes more mature.SNOW Operating Revenue (Quarterly YoY Growth) data by YChartsThe problem is that Snowflake is acting like a company whose growth is accelerating. Snowflake's main problem lies with its operating expenses, as it posted an operating loss of $366 million in the quarter -- a 39% loss margin. Despite Snowflake's slowing growth, this margin hasn't changed at all over the past few years.SNOW Operating Margin (Quarterly) data by YChartsThis is a huge problem, as Snowflake is starting to lose the growth it needs to become profitable. Instead, it will likely have to make drastic compensation cuts to achieve this goal.The lack of emphasis on profitability with slowing growth is a huge red flag for me, as it shows that the management team places hardly any value on profits -- which isn't good for shareholders. While this doesn't doom Snowflake by any means, it reshapes Snowflake's investment picture.Although I currently own shares of Snowflake, I may use this bump as an opportunity to exit the stock or at least reduce my exposure to it. High-growth software companies eventually need to turn a profit, and with Snowflake still trading at a premium valuation (17 times sales), it may be time to move on. Many other high-growth software companies are generating strong profits, and there's no reason why Snowflake can't follow their model.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":14,"commentSize":1,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}