Snowflake shares are particularly correlated to an earnings release is far from accurate
Snowflake, like just about every other high grow company sells on guidance compared to prior expectations. There is nothing special about the share price action after earnings-if they cut guidance the shares are going to drop and if they raise guidance they are going to increase. That is a gross over-simplification of course Margins, free cash flow, management commentary are all aspects of what is going to drive the share price. But writing that Snowflake shares are particularly correlated to an earnings release is far from accurate. The last time the company reported, the prior published CAGR expectations were for growth of 29%; the company, at least on a headline basis, forecast 22%. Today it is forecasting 24%.
There is no shortcut for analyzing Snowflake. You need to determine the market, their competitive position, their go-to-market efficiency and user propensity to spend. You need to put that against the guidance the company provided and how they got there. You need to establish some guardrails for risk to the forecast. And you are still going to be off-especially for a company like this whose short term revenues are totally usage dependent and which appears to have specific motivations in its forecast. If anyone had forecast a 33% revenue growth metric, I would like to meat that person. But to hang a thesis on how Snowflake shares have traded after earnings without context is, in my opinion, a very serious error in methodology. The analysis has to start with the specific revenue drivers and work from that point. Anything less than that is delusional when it comes to looking at correlations.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
