Can Snowflake justify this valuation? Based on the historical growth rate, and growth over Q2 (it had 3,117 customers as of July 2020), we expect Snowflake’s customer base to grow to about 4,600 in FY’21, with total Product revenues coming in at about $530 million. Despite the IPO market going cold in the spring when the coronavirus pandemic hit with full force, companies going public in the U.S. had raised more than $78 billion in their IPOs through the end of last week, on pace for one of the biggest money-raising years for new issues since the tech boom of 2000, according to data provider Dealogic. "When you're in a recession, growth is hard to find.

Atlantic Equities, the most bearish firm overall, sees "significant competition" and says Snowflake's "valuation is discounting perfect execution."
Another problem is Snowflake’s current valuation.

The company competes against Amazon.com Inc.’s Redshift product as well as those from industry stalwart Oracle Corp., which has stumbled in the cloud-computing market. This might include you though you may have invested money in these companies, or may have been working with one of them for years as an employee, or have consulted with them as an expert for a long time. Snowflake (NYSE: SNOW), the cloud-based data warehousing company that went public recently, is valued at about $60 billion, or about $220 per share. Comprising companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently. It's a scarce commodity. The company is still not profitable on a cash flow basis and thus the business considering its valuation has a huge risk of experiencing sharp selloffs if the company misses earnings and revenue expectations. What if you’re looking for a more balanced portfolio instead? It also announced a strategic partnership with Salesforce.com Inc. Snowflake sells a type of database that compiles information from various sources so it can be analyzed. Snowflake’s Cloud Data Warehouse — What I Learned and Why I’m Rethinking the Data Warehouse. However, Snowflake stock, which trades at about 110x our projected FY’21 revenues for the company and over 230x FY’20 revenues appears pricey. Snowflake Valuation Soars To $70.4 Billion in Debut — WSJ Provided by Dow Jones. Slootman said the company recently added two new female board members, Kelly Kramer, the chief financial officer of Cisco Systems Inc., and Teresa Briggs, a former executive at Deloitte LLP. There is still room for Snowflake to grow, he said, adding that among investors, "There's a rethinking of what a company can be worth.". However, the big cloud players have a strong incentive to promote their own warehousing offerings, as it enables them to lock customers into their platforms and services. Opinions expressed by Forbes Contributors are their own.

© 2020 Forbes Media LLC. Sure Snowflake is growing faster than these companies, but there is another reason why the stock could be trading so high, namely a low supply of shares. Shares of the data-warehousing company closed at $253.93, more than double their IPO price of $120 and roughly triple what the company initially targeted a week ago for its offering. EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change. Computer storage startup Snowflake Computing has raised a $450 million round of investment that values the company at $3.5 billion. It had more than 3,000 customers as of July 31, according to its securities filing. Mr. Slootman, Snowflake's chief executive, is no stranger to the IPO process. "We're in a world where big data is trying to figure out how big it can be.". 1) Products, which include Snowflake’s core data warehousing solutions. --Dave Sebastian contributed to this article, Write to Corrie Driebusch at corrie.driebusch@wsj.com. Diamond Sports Bonds Slide After Hulu Drops Sinclair’s Netwo... Ares Weighs Sale of Iconic Paint Maker Farrow & Ball, Iran Targeted by U.S. Over Threats Against Democratic Voters, The U.S.-China Conflict Over Chips Is About to Get Uglier. The company previously was valued at $3.9 billion.

Mr. Landis of Firsthand Capital said he sees some similarities between the market now and the tech bubble two decades ago, but he doesn't expect another reckoning. With benchmark interest rates at near-zero levels, investors have generally been paying a premium for growth. When you find something scarce, you're going to have to pay up," said Kevin Landis, chief investment officer of tech-focused Firsthand Capital Management Inc., which invests in public and private companies.
See all Trefis Price Estimates and Download Trefis Data here, What’s behind Trefis? Before it's here, it's on the Bloomberg Terminal. Just after the stock opened, it traded as high as $319. This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (September 17, 2020). For the six-month period ended July 31, the company lost $171.3 million and had revenue of $242 million, which more than doubled from the year-ago period. Firsthand didn't buy shares of Snowflake in its IPO, viewing it as a bit too popular, he said, adding that he prefers to purchase companies that fly more under the radar. Let’s compare Snowflake with other high growth SaaS and database players. "Right now, there's really not enough growth to go around," he said. “They want to benefit from the upside from them being a partner.”. Snowflake Inc.'s shares skyrocketed on their first day of trading, giving the biggest tech IPO of the year a market value of $70.4 billion and feeding the recent bout of enthusiasm around initial public offerings. Rick Bradt, portfolio manager for the Neuberger Berman Disrupters Portfolio, bought shares of Snowflake in the IPO. Datadog trades at 76x trailing revenues and posted 83% revenue growth in 2020. Berkshire also agreed to buy an additional four million shares of Snowflake at the IPO price from an existing investor, Snowflake said in a filing, significantly upping the size of Berkshire's investment. It will release further details on the relationship in June. You may opt-out by. You can play with assumptions, or try scenarios, as-well-as ask questions to other users and experts. Terms of Service apply. The initial public offering of 28 million shares raised roughly $3.4 billion for Snowflake, not including additional shares the underwriters are entitled to buy or the Berkshire and Salesforce investments. "Does this put pressure on us? Why Is Snowflake’s Trading At Such A Premium?

Snowflake executives participated in a virtual bell-ringing ceremony to celebrate the start of trading, in what has become the norm due to the coronavirus pandemic. While Snowflake offers high growth, we think it comes with considerable risk at current prices. Snowflake Inc., a maker of cloud-based databases, raised $479 million in its latest funding round, boosting the company’s valuation to $12.4 billion. George Zimmer, founder and chief executive officer of Generation Tux, speaks during the DreamForce Conference in San Francisco, California, U.S., on Thursday, Sept. 17, 2015.

From the table above, we can see that the company has the highest price to sales ratio, a testament to its bloated value.

This site is protected by reCAPTCHA and the Google See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams, Led by MIT engineers and Wall Street analysts, Trefis (through its dashboards platform dashboards.trefis.com) helps you understand how a company's products, that you. "We're truly early on in a revolution in tech," he said. “They want to invest in the company as a condition of the partnership,” he said. Snowflake has two operating segments. Dow Jones Industrial Average, S&P 500, Nasdaq, and Morningstar Index (Market Barometer) quotes are real-time.


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