What happened
For most of this week, Snowflake (SNOW 0.80%) was met with a relatively warm reception by investors. Although the data analytics company was hit with a 8%-plus sell-off on Friday, it still managed to eke out a 2.5% gain across the five trading days, according to data compiled by S&P Global Market Intelligence.
So what
Prior to Friday, many of the more speculative tech stocks were doing gangbusters on the stock exchange.
Worries about the macroeconomy had been easing, while the Federal Reserve just pulled the trigger on the lowest of its recent string of interest rate hikes. All things being equal, lower interest rates generally mean greater investor willingness to put money in riskier investments like young tech companies.
But young tech companies, more often than not, tend to be money-losing, which always makes them vulnerable as investments. Snowflake is a model of this type of business; it frequently posts bottom-line losses while typically exhibiting powerful revenue growth. In 2022, for instance, it more than doubled its revenue (to over $1.2 billion) yet deepened its net loss to $680 million from the year-ago $539 million.
NYSE: SNOW
Key Data Points
Now what
Still, it's apparent from this week's trading dynamics that believers are coming back to Snowflake's stock. Many are sensing that it's quite a bargain -- its price is still quite depressed, as even with the recent bump it remains 39% down from its level at the same time last year. Meanwhile, analysts are predicting continued strong top-line improvement, with the average estimate for 2023 revenue currently hovering around $2.05 billion.
