1. Snowflake Inc. (NYSE:SNOW)
Number of Hedge Fund Holders: 70
IPO Date: September 16, 2020
Snowflake Inc. (NYSE:SNOW), an American software company, tops our list of the best young stocks to buy now. Recently, the company announced the development of Financial Services Data Cloud, a new platform to help the finance sector to grow their businesses.
Snowflake Inc. (NYSE:SNOW) launched its IPO in December 2020 and raised over $3 billion. It is the first company to double its value on an opening day as the company’s share price reached $300 from $120 per share on its first trading day. This September, BTIG upgraded Snowflake Inc. (NYSE:SNOW) to Buy with a $353 price target. The stock gained 36.63% in the past year.
Altimeter Capital Management is the company’s leading shareholder, with shares worth over $6.03 billion. As of Q2 2021, 70 hedge funds tracked by Insider Monkey have positions in Snowflake Inc. (NYSE:SNOW), compared with 71 in the previous quarter. These stakes are valued at $12.5 billion.
RiverPark Funds released its Q1 2021 investor letter and mentioned Snowflake Inc. (NYSE: SNOW) in it. Here is what the firm has to say:
“We also established a position in Snowflake during the quarter. Snowflake offers cloud-based data storage and analytics, generally termed “data warehouse-as-a-service.” The data warehousing market—created by the massive, growing amount of user, customer, and account data and the need to search and analyze it—has historically stored its data on physical servers located on-premises. The cloud data platform market—storing data off-premises on cloud servers—is a relatively new $70 billion+ market. Significantly, incremental warehouse data capacity and renewals are expected to be driven by and to the cloud, with more than 75% of databases in the cloud by 2022.
Snowflake requires absolutely no infrastructure management from its users, is fully scalable for each customer, runs on Amazon, Microsoft, or Google cloud platforms, and most critically, Snowflake helps companies analyze their data. The company also has a unique, customer-aligned billing model based on usage. All of which has led to Snowflake being among the leaders of this highly fragmented market, posting 124% revenue growth last year. SNOW’s growth comes from the combination of more customers—which grew 73% last year—and customers buying more services—the company boasts an amazing 150%+ net customer retention. The company’s growing scale has also led to increasing gross margin and operating leverage, up 1,100 basis points and 8,200 basis points, respectively, over the past two years. The company has guided to FCF break-even this year, and with the company’s capital expenditure-light model—Snowflake uses the public cloud for hosting—we expect FCF to grow much faster than revenue growth, which we forecast to grow comfortably more than 50% per year for the next several years. Additionally, we have great confidence in the SNOW management team, which previously had an enormously successful run guiding one of our other core Cloud software holdings ServiceNow.”
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