Snowflake Stock Forecast: IPO Superstar
The current Snowflake stock forecast is bullish and the company has recently been on analysts “hot tech stock” lists. Snowflake (NYSE: 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
Snowflake produced $3.9 billion with its IPO, making it the largest software IPO of all time. And with U.S. initial public offerings on a tear this year, Snowflake is a favorable recently new listing starting to attract institutional interest raking in $171 billion and already topping the 2020 total.
The Snowflake IPO was priced at $120 per share last September, attracting big investors like Salesforce and Warren Buffett’s Berkshire Hathaway. Buffett’s Berkshire Hathaway owns more than 6 million shares… to top it off, Snowflake CEO, Frank Slootman, holds 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.
To add on to the list of top investors, Sequoia Capital, the firm that backed Google, Apple, Oracle, PayPal and YouTube invested $271 million, making it Snowflake’s largest shareholder. If that’s not telling about how strong investors feel about the stock, I don’t know what is.
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 getting started on its path to growth and financial dominance in its sector. The cloud computer market continues to expand and is expected 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.
Snowflake opened at $245, soaring to $429 per share last December before coming back down to the $260s. But even after that massive pullback, Snowflake still trades at more than 70 times this year’s sales, making it one of the market’s priciest tech stocks. It grew revenue by 173% from 2019 to 2020.
Analysts have been studying the Snowflake stock forecast and expect revenue to reach $1.1 billion this year, increasing by 88%. It’s then expected to increase another 64% to $1.83 billion in fiscal 2023.
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.
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).
Donnelly believes Snowflake may finally be completing the second of three major stages…
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.
The stock has since reversed following its early gains in November and December. So, it will definitely pay to wait until Wall Street decides what to do with the stock before putting at your eggs in one basket.
As the stock continues to trade and becomes more seasoned, large corporations will analyze and study the Snowflake stock forecast. Performing due diligence on the stock segues into the second stage. This Institutional Due Diligence Phase could potentially last years. However, Donnelly believes that Snowflake may be entering the third and final Institutional Advance phase, which is why it’s on her radar.
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 recently 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 recent partnership with C3.ai and the data visualization firm Domo will likely garner 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.
$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. This includes $554 million in product revenue for the January 2021 fiscal year. Mike Scarpelli, Snowflakes CFO, recently stated that the company currently sizes its total addressable market at $90 billion, up from $81 billion.
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 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.
Trading experts Bryan Bottarelli and Karim Rahemtulla are always in search of the most profitable trading opportunities for their subscribers and customers… and they’re both bullish on this Snowflake stock forecast. The trading duo provide valuable insight on stocks every day in their FREE e-letter Trade of the Day. Sign up below to start receiving daily market insight and guidance on how to profit in both the short and long-term.