2. Snowflake Inc. (NYSE:SNOW)
Price-to-Sales Ratio as of August 1: 32.47
Number of Hedge Fund Holders: 81
Snowflake Inc. (NYSE:SNOW) provides cloud and data warehousing solutions for enterprises around the world. Snowflake Inc. (NYSE:SNOW) has remained volatile this year. As of August 1, the stock has dipped by 54.40% year to date and has a 52-week range of $110.26 to $405.00. Regardless, the company’s data analytics and warehousing platforms are still used by cloud computing giants such as Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc. (NASDAQ:GOOG).
On July 12, Baird analyst William Power initiated coverage of Snowflake Inc. (NYSE:SNOW) with an Outperform rating and a $200 price target. Power noted that Snowflake Inc. (NYSE:SNOW) is an industry-leading provider of cloud solutions for data analytics, and is rising to prominence while overtaking legacy data providers. Power expects Snowflake Inc. (NYSE:SNOW) to record 66% revenue growth in fiscal 2023 and 49% in fiscal 2024. The analyst sees the stock suffering from recession risks but remains bullish on the company because it is generating solid free cash flows.
In the second quarter of 2022, Bailard Inc raised its stakes in Snowflake Inc. (NYSE:SNOW) by 496%, bringing them to a value of over $1 million. As of June 30, Bailard Inc is the leading shareholder in Snowflake Inc. (NYSE:SNOW).
At the close of Q1 2022, 81 hedge funds were eager on Snowflake Inc. (NYSE:SNOW) and held stakes worth $9.73 billion in the company. This is compared to 84 positions in the previous quarter with stakes worth $14.56 billion.
Here is what Baron Funds had to say about Snowflake Inc. (NYSE:SNOW) in its first-quarter 2022 investor letter:
“Snowflake grew revenues…106% (to $1.2 billion — while new bookings in the fourth quarter alone were $1.2 billion in contract value) with 12% margins. The stock was down 32% in the first quarter. We believe that these companies, along with many others that we own, are the long-term beneficiaries of digital transformation, a multi-decade paradigm shift sweeping global economies today. Frank Slootman, Snowflake’s CEO, explained it this way in his most recent earnings call with investors:
“Snowflake’s growth is driven by digital transformation and long-term secular trends in data science and analytics, enabled by cloud-scale computing and Snowflake’s cloud-native architecture. Snowflake is a single data operations platform that addresses a broad spectrum of workload types and incredible performance economy and governance. As a platform, Snowflake enables the data cloud, a world without silos and the promise of unfettered data science.”
In plain English it means that we want to make better decisions and we have all this data available to us. Snowflake will enable businesses to utilize all their data to improve their decision-making.
Snowflake Inc. provides a data platform for large-scale data analytics. Shares fell 32% during the first quarter despite reporting strong results, finishing 2021 with 106% year-over-year revenue growth, while booking $1.2 billion of new business in the fourth quarter alone. Shares declined due to the rotation out of fast-growing long-duration stocks as well as concerns over the company’s newly introduced infrastructure improvements, which make customers more efficient in using the Snowflake platform (lowering cost on a per usage basis). While some investors viewed that negatively due to the near-term impact on usage-based revenues, we see this as a positive development, since putting customers first tends to create a lot of value over the long term. We believe that by reducing costs to customers, they will migrate more workloads to Snowflake, making the company better positioned to capture a bigger portion of its large market opportunity and extending its technology leadership over competitors. We remain excited about Snowflake’s best-in-class growth at scale with favorable unit economics, addressing one of the largest opportunities in technology.”
