Software firm Snowflake (SNOW) lost more than one-quarter of its value (-27%) in the last month after posting quarterly results. As C3.ai (AI) stock bounced from a $25.00 bottom and cybersecurity firm Okta rose, SNOW stock plunged.
Snowflake is on sale. Director Mark McLaughlin disclosed buying 3,030 shares for around $501,000 on March 6, 2024. This appears bullish but insiders sold 3.08 million shares in the last 12 months. The other insiders averted further losses when Snow posted a 31.5% Y/Y jump in revenue to $774.6 million. Markets, however, did not like the Q3 operating income margin outlook of 3%.
Investors overlooked Snowflake's strong 62% increase in the number of jobs running on Snowflake year-on-year. As the firm signs more large multi-year deals throughout this year, it will demonstrate Snowflake’s commitment to the platform. The company will thrive as pent-up demand for several new products drives software usage. For example, Snowflake has Document AI, Cortex, and Snowpark Containers Services. With Document AI, customers may extract structured information from PDFs. Enterprises have a large volume of PDF data to process.
Short-term investors will not realize the back-end loaded revenue potential. Long-term investors may take advantage of the trader’s impatience to take a position a favorable prices.
Your Takeaway
Snowflake did not get its products to the market fast enough. Executives recognize the need to focus on sales enablement. By getting new products like Cortex and Unistore (announced two years ago) sooner, customer spending will increase revenue growth later this year.
