Snowflake's (SNOW -0.83%) cloud-based data platform is a big hit with its more than 7,200 customers. Those customers are expanding spending on Snowflake's platform rapidly -- the company's net revenue retention rate was 165% in the third quarter. There are now 287 customers spending at least $1 million annually with Snowflake, a number that has nearly doubled over the past year. All of this led to revenue growth of 67% in the third quarter.

While Snowflake's results look great, the company's guidance was a different story. Snowflake expects to generate product revenue between $535 million and $540 million in the fourth quarter, good for year-over-year growth of 49% to 50%. What's more, adjusted operating margin will plunge to just 1%. That metric was 8% in the third quarter.

Snowflake stock was down around 6% in premarket trading on Thursday as investors digested this growth slowdown. Is it time to buy the stock? Or should investors hold back as headwinds come into view?  

Still a massive long-term opportunity

Snowflake's revenue this year will be right around $2 billion, a notable milestone for any software company. Economic uncertainty is starting to impact Snowflake's customers and their buying patterns, so next year may be a less impressive year for the company than this year. But in the long run, revenue could multiply many times over if the company is right about its enormous market opportunities.

By 2026, Snowflake sees its total addressable market reaching nearly $250 billion. Most of that opportunity will be in its bread-and-butter data business. The company's data warehouse, data lake, and Unistore products are expected to account for $173 billion of that total.

The rest will come from collaboration, data engineering, cybersecurity, data science, machine learning, and application workloads. While Snowflake's growth may be slowing down as customers look to pull back a bit on spending, revenue has the potential to expand at a strong double-digit rate for the foreseeable future as the company goes after its quarter-trillion-dollar opportunity.

But Snowflake stock is obscenely expensive

Snowflake's potential to grow into one of the largest software companies on earth doesn't come cheap for investors. Prior to Thursday's market open, Snowflake was valued at roughly $46 billion. That's about 22 times annual revenue.

That kind of valuation wouldn't have looked out of the ordinary last year. In fact, it probably would have looked like a bargain relative to other software stocks. Snowflake is one of the fastest growing publicly traded software companies, and the rate at which its customers expand their spending is downright incredible. But this year, as economic uncertainty ramps up, interest rates rise, and high-flying tech stocks get bludgeoned, a price-to-sales ratio over 20 is tough to justify.

When a stock's valuation is as high as Snowflake's, any sign of bad news can send the stock tumbling. There's just no room for error. And if the growth slowdown continues and investors start to lose faith, it's a long way down. Snowflake stock is already down more than 60% from its all-time high, but that could be just the beginning.

Snowflake can't be valued based on profits because it has none. Yes, the company produces adjusted profits and free cash flow, but only because it hands out an incredible amount of stock-based compensation that's backed out of both of those numbers. In the third quarter alone, stock-based comp totaled $229 million. The company's net loss under generally accepted accounting principles (GAAP) was more than $201 million.

Uncertainty rises

Snowflake is an unprofitable tech company that was growing extremely quickly but is now facing a growth slowdown of unknown duration and severity as economic conditions deteriorate. This is not an environment that is going to do the very expensive stock any favors.

If Snowflake can prove next year that its growth rate can hold up reasonably well in the face of economic headwinds, the stock could be in for a rebound as investors regain faith in the long-term story. But if growth continues to slow, and if the bottom line continues to sink deeper into the red, Snowflake stock will be in big trouble.