Sometimes even the greats lose. That’s a fact that should give us all solace when a portfolio turns down. Just today, Berkshire Hathaway (NYSE:BRK.B) revealed that its position in cloud software maker Snowflake (NYSE:SNOW) fundamentally melted away. At least, all the paper gains Berkshire had from investing in Snowflake did. Snowflake stock slipped substantially in Thursday’s trading session but enjoyed a tiny rally after hours.
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Back in September 2020, Berkshire put $735 million behind Snowflake at $120 per share, its initial public offering price. That figure better than tripled by November 2021, when it hit its high of over $400 per share. Fast forward to today, and the stock trades at just a dollar and change above its IPO price. Many regarded Berkshire’s move as unusual; Warren Buffett stays away from IPOs, as well as market sectors in which he’s not an expert.
Snowflake’s fall was almost as impressive as its rise. However, there are elements suggesting that now is not the time to get out. Average projections for Snowflake’s growth in the next fiscal year come out to 46.4%. That’s thanks mainly to the fact that the company has only been around for roughly two and a half years.
Snowflake’s recent acquisition of Myst may also give it an edge, as Snowflake can approach that big new market with a new feature: time-series forecasts. With Goldman Sachs expecting a recovery for Snowflake, and JMP expecting a jump as well via analyst Patrick Walravens, it may be a good play to stay in and even buy more.
Wall Street, in general, is leaning toward buying. The analyst consensus currently calls Snowflake a Moderate Buy. With an average price target of $187 per share, Snowflake shares also offer a 53.83% upside potential.
