Jefferies’ Top Crowded Software Short Positions: Top 9 Stocks

4. Snowflake Inc. (NYSE:SNOW)

Number of Hedge Fund Holders In Q2 2024: 69

Shares Short % Of Outstanding: 3.93%

Snowflake Inc. (NYSE:SNOW) is one of the biggest data warehousing companies in the world. It holds a 22% market share, which makes the firm a key player in today’s AI-driven industry since copious amounts of data are needed to train AI models. However, Snowflake Inc. (NYSE:SNOW) is one of the worst-performing software stocks in 2024 as its shares are down a whopping 38.9% year to date. The troubles started in 2024 when Snowflake Inc. (NYSE:SNOW)’s fiscal first quarter guidance of $745 million to $750 million missed analyst estimates of $760 million. The shares fell despite the firm beating revenue and profit estimates, and it underscored the criticality of growth for any SaaS firm’s hypothesis. Snowflake Inc. (NYSE:SNOW) tried to address this in August when it increased full-year revenue guidance on the back of AI. But, the shares fell by an additional 14.7% as the company did not project improving costs. Consequently, leveraging its size and scale to grow in the AI industry will continue to drive Snowflake Inc. (NYSE:SNOW)’s hypothesis.

Baron Funds mentioned Snowflake Inc. (NYSE:SNOW) in its Q2 2024 investor letter. Here is what the fund said:

“Snowflake Inc. 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.”