What happened

Snowflake (SNOW -0.83%) revealed its plans Thursday to grow its product revenue from $500 million last year to $10 billion in fiscal year 2029.  

Investment bank Morgan Stanley immediately hailed the projection as "unprecedented" growth and "faster than any other company in software." And Snowflake stock is down 3.8% as of 10:45 a.m. EDT Friday.  

How does that compute?

Simple red arrow declining stock chart on a white checked background

Image source: Getty Images.

So what

The logic goes like this: Morgan Stanley is clearly astounded at the audacity of Snowflake's goal. The bank even believes that Snowflake could succeed in hitting the target, or indeed, that its goal "may actually prove conservative" as the company's portfolio of products expands into a large and growing market.

And yet, notes TheFly.com this morning, Morgan Stanley held both its rating (neutral) and its price target ($270 a share) steady today. And the reason for that is that Morgan Stanley reasons that, in order for Snowflake to grab as much market share as it's aiming for, the revenue growth may need to come at the cost of competing on price and sacrificing profit margins.

Now what

This seems a not uncommon concern on Wall Street. In addition to Morgan Stanley, analysts at JMP Securities responded to Snowflake's announcement by holding their rating (outperform) and price target ($300) steady. Piper Sandler actually cut its price target by 7% to $290 (but with an overweight rating).

Piper called Snowflake the "core growth franchise to own for the next decade" because of the sales growth, but JMP worried that the company's targeted operating profit margin of 10% plus was less than analysts had hoped to see.

And as of this moment at least, no one on Wall Street thinks Snowflake will earn a profit before 2026 at the earliest.