Snowflake (NYSE:SNOW)
Snowflake stock plunged nearly 4% on Tuesday after the investment firm Bernstein began covering the data warehousing company. Bernstein noted that although Snowflake (NYSE:SNOW) has seen strong growth, taking away business from the entrenched cloud competitors may be challenging. This caused Snowflake stock investors to be concerned about the company’s future.
Analyst Dr. Mark Moerdler began coverage on Snowflake (NYSE:SNOW) with a market performance rating and a price target of $166 on Snowflake stock. He pointed out that the firm, managed by Frank Slootman, has been “one of the darlings” of the cloud industry due to its robust growth and excellent execution of business strategies. However, financial projections, such as the 30% year-over-year growth in fiscal 2029, have already been “baked into the stock’s valuation.” Furthermore, the company is up against stiff competition from the likes of Amazon (AMZN) Web Services, Microsoft (MSFT) Azure, and Google (GOOG) (GOOGL) Cloud Platform, so it may be difficult for the company to beat projections.
According to the letter Moerdler sent to clients, “to materially achieve those projections would require winning significant revenue and share in new areas battling against strong frequently established Cloud rivals, which we think is going to be tough.”
The analyst continued by saying that Snowflake (NYSE:SNOW) technology has a variety of use cases and offers an intriguing outlook on the future of data, but that the company’s development is stalling because it is running against the law of big numbers and a “saturating market.”
“While the firm has been extending the reach of its product into adjacent areas, we feel that it is going to be more difficult and take longer to capture share in these market prospects than many anticipate,” Moerdler said further.
At the beginning of this month, Jefferies said that “winter arrived soon” for the software industry, and they identified Snowflake stock as one of the companies that lost the most.
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Snowflake stock fell when Bernstein began covering and said that acquiring market share would be “challenging.”
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Author Shariq Khan 
