Next move? Snowflake dips 5% after splashy opening debut

Next move? Snowflake dips 5% after splashy opening debut
  • Stock Market of the cloud computing company doubled in value on Wednesday, giving it a market capitalization of more than $70B, well above the $12B it was valued at back in February.
  • Why so much excitement? Snowflake’s (NYSE:SNOW) product is called a data warehouse, which allows big companies to analyze and manage multiple data sources, and their version runs entirely on remote cloud systems. It has massive revenue growth, more than 120% Y/Y, and caught on to the shift towards remote work as a result of the coronavirus pandemic.
  • Plenty of concerns: Revenue more than doubled in the past six months, to $242M, but the firm posted a net loss of $171M, slightly less than the loss it posted in the same period a year ago. Even when looking at the company’s projected revenues, it is still very richly valued, compared to other cloud businesses. Following yesterday’s wild session, Snowflake’s Price/Sales ratio approached ~190x on a trailing twelve-month basis. It also has big competitors, who have all been devoting big resources to copying Snowflake’s best features, and a price war may ensue.
  • SNOW -5% premarket to $241/share.
  • Check out some SA articles on other unicorns preparing to go public: Airbnb, Palantir, and DoorDash.

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Market news summary from Seeking Alpha Market News.
Author: SNOW

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