Why Snowflake Stock Is Down By 16% Today

Key Insights

• Snowflake’s fourth-quarter report exceeds analyst estimates. 
• However, the market is focused on the disappointing guidance for the first quarter of this year. 
• In the current market environment, traders are very sensitive to any signs of slowing growth in high-PE stocks. 

Snowflake Stock Retreats As Investors Focus On Slowing Growth

Shares of Snowflake gained strong downside momentum after the company released its quarterly results.

Snowflake reported product revenue of $359.6 million and a GAAP loss of $0.43 per share, beating analyst estimates on both earnings and revenue.

While the results exceeded analyst expectations, the market focused on the company’s revenue outlook for the first quarter. Snowflake expects to report product revenue of $383 million – $388 million, which means that the company’s growth is slowing down.

In addition, Snowflake announced that it intended to acquire Streamlit, which is a “framework built to simplify and accelerate the creation of data applications.”

What’s Next For Snowflake Stock?

Analysts expect that Snowflake will report earnings of just $0.04 per share in the current fiscal year, so it’s not surprising to see the stock falling on the first signs of slowing growth.

Snowflake stock reached its all-time high levels back in December 2020, when it made an attempt to settle above the $430 level. The stock market has become more cautious with growth stocks in recent months, and traders want to see that growth companies continue to grow at a fast pace.

In this light, it remains to be seen whether speculative traders will rush to buy Snowflake stock after the disappointing guidance. The stock remains richly valued, so the company must prove that it can maintain aggressive growth rates in the next few years. In case the market stays concerned about Snowflake’s ability to grow at a fast pace, its shares will find themselves under more pressure.

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