Please ensure Javascript is enabled for purposes of website accessibility

Why Snowflake Stock Declined by 11.7% in March

By Royston Yang - Apr 8, 2021 at 10:00AM

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 data cloud company still enjoys strong growth and a high customer retention rate.

What happened

Shares of Snowflake (SNOW -2.78%) declined by 10.1% in March, according to data provided by S&P Global Market Intelligence.

The data cloud company saw its share price soar to a high of $390 after it went public in September last year, but it has since declined by around 41%.

Cloud with five arrows pointing to various electronics devices.

Image source: Getty images.

So what

Snowflake's fourth-quarter and full-year 2020 earnings report last month showed that revenue more than doubled year over year from $264.7 million to $592 million. Gross profit margin also improved from 56% to 59%, and the company reported 73% year-over-year growth in its customer base to reach 4,139 customers. 

But investors may have been disappointed by the larger net loss incurred by Snowflake despite its soaring revenue. Net loss widened from $348.5 million to $539.1 million and the company also reported negative operating cash flow. These factors, coupled with a sell-off in technology stocks last month, probably accounted for the decline in the company's share price.

Now what

Investors should be patient with Snowflake, though, as the company has reported strong customer metrics. Customers with over $1 million in product revenue surged by 88% year over year to 77, while its dollar-based net revenue retention rate stood at an impressive 168% for the quarter. 

Snowflake continues to broaden its base of working partners, with the recent addition of Qlik onto its platform. Qlik is a data integration and analytics provider and is partnering with Snowflake to enable faster delivery of SAP data to offer clients a smoother cloud analytics experience. As the company steadily expands its ecosystem of partners, its clients should also find it stickier and contribute more to its revenue growth.

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
$153.96 (-2.78%) $-4.40

*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
345%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

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

Premium Investing Services

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