Snowflake, a cloud-based data management provider, had seen remarkable stock performance in 2021. After its initial public offering (IPO) on the New York Stock Exchange in September 2020 at $120 per share, Snowflake’s stock price gained as much as 400% by March 2022. The company’s strong stock performance serves as a testament to how competitive the global cloud computing market has become over recent years. As organizations increasingly move towards using cloud-based solutions for managing their operations, Snowflake is well-positioned to capitalize on this trend and continue its growth even further into the future. With that in mind, over the past year Snowflake’s stocks did not fare very well though, and a lot of investors are signaling some rather significant losses.
As of today, the company’s market capitalization is around $159 billion—making it one of the largest enterprise software companies in the world. The driving force behind Snowflake’s success is its focus on delivering innovative tools that enable customers to work with data more efficiently while also empowering them with greater insights and analysis capabilities. As well as providing an integrated suite of services designed to reduce complexity and improve scalability for their customers, Snowflake is attracting further attention due to its growing partnerships across various industry sectors such as retail, healthcare, financial services and transportation.
What happened to Snowflake stocks?
The share prices for Snowflake stocks plunged 60%, which is extremely problematic and a sign that the company might not be doing very well. This is over a 1-year period, however even data for the last quarter shows that the stock price is down 19%. People looking to invest in Snowflake because they saw it as a great option are definitely not happy, yet stock prices always fluctuate, so an issue like this is bound to happen.
Why did this problem appear?
What industry experts suggest is that the market is focused on revenue as well as revenue growth. Snowflake managed to grow their revenue by 81% over the past year. It clearly does much better than many loss making companies. A growth stock like this one is bound to be volatile. Another thing to note here is that the CEO is paid less when compared to other companies that have a median size like this. At this time, the forecasted annual earnings growth is around 28%, and that’s only going to keep growing.
The market is still growing, despite losses
Snowflake investors are definitely not happy with the 60% loss that happened in just 12 months. However, the market also lost 23%, so it’s not like Snowflake ended up outside of the market norm. What we also have to realize is that the Snowflake stock is new. We don’t really have a lot of information about the stock and what it can deliver in the long run. Its volatility can be seen as something normal, considering the market didn’t really do that well either.
Investing in any stock can always be seen as a risk, even if data might seem very positive. You never really know what you are getting into and how the market evolves. However, you can also assess warning signs too. In the case of Snowflake, shareholders were diluted the past year. The company is not profitable, nor will it be for the next three years. Despite that, the company growth is appealing to a lot of investors, and they might be willing to bet on its future!
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