Normally, when a stock like cloud computing stock Snowflake (NYSE:SNOW) slips after posting a solid round of earnings, it’s usually a matter of future guidance that’s left investors skittish. Snowflake posted a winner for its earnings report, but couldn’t hang on to the gains it saw immediately after. Snowflake stock was down over 5% at one point in Thursday afternoon’s trading.
Snowflake’s earnings report proved a winner on every front. It won in earnings, and decisively; Snowflake posted earnings of $0.22 per share, which better than doubled analyst expectations calling for $0.10 per share. Revenue also came in nicely ahead of projections, settling at $674.02 million against analyst projections calling for $635.28 million. That $674.02 million was also sufficient to deliver one more win: a 35.5% increase over the second quarter of 2022’s figures. Sector data also delivered a win: Snowflake saw a revenue retention rate of 142%, it counts 402 different customers with trailing 12-month revenue of over $1 million, and it counts 639 Forbes Global 2000 customers to its credit.
Impressive? Staggeringly. So what happened to send shares plunging? One issue was third-quarter projections. Snowflake put out a range of between $670 million and $675 million in product revenue, which would have represented a healthy gain of 28% to 29% against 2022’s third quarter. Analysts, however, proceeded to suck the life out of the golden goose and project earnings of $674.9 million, making a beat virtually impossible. This was only compounded by full-year projections; Snowflake looked for $2.6 billion in full-year revenue, up 34% against 2022. Meanwhile, analysts projected $2.61 billion.
Those same analysts, however, have a lot of faith in Snowflake, regardless. Currently, Snowflake stock is considered a Moderate Buy, backed up by 25 Buy ratings, seven Hold and one Sell. Further, with an average price target of $189.28, Snowflake stock comes with a 26.19% upside potential.
