Snowflake Stock Forecast: IPO Superstar
Current volatility in the markets and a weak earnings report has analysts debated whether or not to invest in Snowflake (NYSE: SNOW) stock right now. However, given the recent pressure in software stocks, SNOW is still trading above its intrinsic value. This article will examine Snowflake stock forecast and what to expect next.
SNOW is a cloud computing-based data warehousing company based in Bozeman, Montana. Snowflake was founded in July of 2012 and became a publicly traded company in October of 2014. Mike Speiser was the founding investor and first CEO who partnered with Benoit Dageville, Thierry Cruanes and Marcin Zukowski to build the company. Together, they created a future for companies in which data was the main component to drive better outcomes.
Snowflake Stock Forecast for Largest Software IPO Ever
The Snowflake IPO was priced at $120 per share, attracting big investors like Salesforce and Warren Buffett’s Berkshire Hathaway. Buffett’s Berkshire Hathaway bought over six million shares… to top it off, Snowflake CEO, Frank Slootman, holds around 5.3 million shares in the stock, a stake worth $1.4 billion. Benoit Dageville, Snowflake’s co-founder and chief technology officer, owns around 8 million shares, worth more than $2 billion.
Snowflake produced $3.9 billion with its IPO, making it the largest software IPO of all time. Due to this, the stocks FQ4’22 earnings report was surprising to many investors. However, investors might want to consider capitalizing on this recent weakness. SNOW expects FY23 revenue to increase by roughly 66%. And the company believes Snowflake stock forecast will significantly improve in the long-term due to software updates and improvements. CFO Michael Scarpelli wants investors to have a long-term perspective.
Slootman recently stated that “The company is taking a conservative approach to guidance. The original outlook for FY22 was 80% growth, and the actual outperformance was 26 percentage points higher. We have also signed up a slew of new customers that are just coming on board. Therefore, the company is not going to get aggressive projecting revenue from customers that so far have no history on the platform.”
Unlimited Growth Potential
With some of the biggest names on Wall Street taking a stake, Snowflake could be one of the best-performing stocks of the next decade. It’s just starting its path to growth and financial dominance in its sector. The cloud computer market continues to expand and is expecting to increase 18% this year alone, totaling $304.9 billion, up from $257.5 billion last year. It’s forecast to rise even higher in the years to come.
With more companies allowing their employees to continue working remote, the demand for cloud services is booming. And Snowflake’s wide range of cloud-based products provides everything a client might need.
Keep reading for more info on Snowflake stock forecast.
The Three Stages of a New IPO Listing
Kathy Donnelly, pro equity trader who focuses on IPOs and super growth stocks, created a framework to classify the journey newly traded stocks make. At a Yahoo Finance Premium webinar last year, she broke down the three stages of the IPO process:
- the IPO Advance Phase (IPO-AP)
- the Institutional Due Diligence Phase (I-DDP)
- the Institutional Advance Phase (I-AP).
The first stage is the first run-up in price when the stock initially lists on an exchange. There’s no guarantee price will rally, and a sell-off can result in what Donnelly calls an IPO Advance Failure. When stock price rallies out the gate, it tends to be short-lived.
As the stock continues to grow improve its platform, large corporations will analyze and study the Snowflake stock forecast. Investors remain confident about the Snowflake stock forecast due to its long-term growth trajectory. The company is expected to steadily grow into its premium valuation in the coming years.
Not Just Surviving: Thriving
Snowflake has launched new features that are going to continue to push its profitability forward in the coming years. The expansion of its developer platforms looks promising for the company’s customer retention rate. Its partnership with C3.ai and the data visualization firm Domo has been garnering even more partners, especially those that don’t want to be fastened to the cloud giants.
After the company implemented its cloud technology, its customers saw an average growth of 612% in just three years. Snowflake has over 120 patents on its cloud technologies. In less than a decade, this company went from a mute stock on Wall Street… to becoming one of Amazon’s, Google’s and Microsoft’s No. 1 competitors. It’s no wonder why Truist Financial analysts believe Snowflake “possesses a unique technology advantage that will give them a dominant competitive position in the data cloud in both the short and long term.” That bodes extremely well for our Snowflake stock forecast.
SnowFlake Stock Forecast: $10 Billion in Product Revenue
Snowflake’s goal of reaching $10 billion in annual product revenue by fiscal 2029 is quite an ambitious goal. However, it’s nothing short of achievable. The stocks top-line growth is impressive. The company recently stated that product sales will increase as much as 67% to $1.9 billion in the current year.
It also expects about 1,400 of its customers to be producing over $1 million in annual product revenue by fiscal 2029. That is quite an increase from just 77 customers in 2021. Average revenue from those higher-value customers expects to jump from $3.4 million to about $5.5 million.
If Snowflake stock forecast achieves its 2029 goals, it could potentially generate nearly $20 billion in annual revenue by fiscal 2031. Investors believe, based on all this data, that Snowflake could grow into its ambitious price value.