6. Snowflake Inc. (NYSE:SNOW)
Year to Date Gain as of October 28: -38.64%
Number of Hedge Fund Holders: 69
Snowflake Inc. (NYSE:SNOW) is a growth company that provides a cloud-based data platform. This platform helps businesses manage and analyze their data more effectively. The data cloud analytics company has seen its sentiments in the market take a hit amid growing concerns about decelerating product revenue growth. While revenue in the second quarter rose 30% year over year to $869 million, it slowed from the 34% growth recorded in the fiscal first quarter.
The slowdown in cloud computing growth is the catalyst behind Snowflake Inc. (NYSE:SNOW)’s 38.64% year-to-date slump, affirming it is one of the worst-performing growth stocks in 2024. Additionally, Snowflake is also battling a widening net loss that hit $317 million or 95 cents a share in the fiscal second quarter from $227 million in the fiscal first quarter. The decelerating growth comes as Snowflake faces stiff competition, especially from Google’s BigQuery, which offers cloud data services.
In addition, Microsoft Fabric’s cloud data analytics platform is also giving Snowflake Inc. (NYSE:SNOW) a run for its money as a solid new rival. The fact that Snowflake’s business model revolves around how much data that customers crunch or store means it will always be under pressure from the tech giants that operate some of the biggest cloud platforms known to be customers’ preferred cloud platforms
Amid the stiff competition affecting growth rates, analysts believe that a new generative artificial intelligence portfolio will help strengthen Snowflake Inc. (NYSE:SNOW)’s competitive edge, consequently resulting in improved topline performance.
Baron Funds, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:
“Snowflake Inc. (NYSE:SNOW) is a leading cloud data platform that is predominantly used for data analytics. The stock declined 16.4% as investors evaluated the impact of a recently announced CEO transition, an investment cycle driven by spend on AI, a cybersecurity incident, and a rapidly changing competitive environment. With GenAI capturing a larger portion of the public discourse, Snowflake’s positioning in the future data stack is under scrutiny by both investors and customers. We believe Sridhar Ramaswamy, the newly appointed CEO, can help the business more efficiently transition toward an AI-first world. While Databricks and other key competitors are presenting strong results, we believe Snowflake’s brand, existing customer base, and accelerating product innovation should allow it to continue to capture share in a relatively large and strategic market. Management continues to describe strong demand trends for its core data analytics, which is also demonstrated by the relatively healthy expansion rates among existing customers while new go-to-market initiatives can help grow the customer base further. Longer term, we remain excited about the Snowflake’s strategic opportunity as the data platform for its customers.”
