Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Snowflake Stock Surged Today

By Joe Tenebruso - Dec 3, 2020 at 3:40PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The recent IPO is growing at a torrid clip.

What happened

Shares of Snowflake ( SNOW -4.21% ) soared on Thursday, following the cloud-based data management company's first earnings report since its initial public offering (IPO) in September.

As of 3:13 p.m. EST, Snowflake's stock was up more than 12% after rising as much as 17.2% earlier in the day.

So what

Snowflake's third-quarter revenue soared 119% year over year to $159.6 million. The data platform company is benefiting from a powerful combination of new customer additions and higher sales to existing clients. Its total customer count surged 84%, to 3,554, at the end of October. Meanwhile, its net revenue retention rate -- which measures sales to a cohort of customers from one year to the next -- came in at a sterling 162%.

"Our vision of the Snowflake Data Cloud mobilizing the world's data is clearly resonating across our customer base," CEO Frank Slootman said in a press release.

A person is pointing to an upwardly sloping digital stock chart.

Snowflake's shares rose sharply on Thursday. Image source: Getty Images.

Still, as a newly public company, Snowflake is not yet profitable. Management is investing aggressively in growth initiatives. Rising expenses, in turn, led Snowflake to post an operating loss of $169 million, compared to a loss of $90 million in the prior-year period.

Now what

As businesses increasingly shift their processes to the cloud, Snowflake is enjoying soaring demand for its data warehousing solutions. And much more growth lies ahead. Management pegs Snowflake's current market opportunity at $14 billion. This leaves tremendous room for expansion for a company that's projected to generate roughly $540 million in revenue in fiscal 2021. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Snowflake Inc. Stock Quote
Snowflake Inc.
SNOW
$345.11 (-4.21%) $-15.17

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
624%
 
S&P 500 Returns
141%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/05/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.