After debuting at an absolute nosebleed valuation after its 2020 IPO, some investors have been warming up to the idea of investing in Snowflake (SNOW -0.81%). After all, shares have fallen some 70% from all-time highs, and the business has continued rapidly expanding along the way. In a new era of AI, surely Snowflake stock is a great buy now, right? 

Not so fast. Snowflake certainly has a promising future, and the stock could have far more upside now than it did a few years ago. But there are many compelling values to invest in after the bear market of 2022. Is Snowflake really a buy right now?

Snowflake is getting "bigger," but not in the best way for shareholders

Snowflake has certainly delivered on its goals of getting a lot bigger since its late-2020 IPO. Revenue went from just under $600 million in calendar year 2020 (fiscal year 2021 for Snowflake) to just over $2 billion in revenue in 2022 (fiscal year 2023). Free cash flow also went from negative to a healthy positive $496 million last year.

Interestingly, while it's well known that the stock is now down over 40% from when it hit public markets, its market cap is actually down only about 32% from the IPO to $47 billion. That's thanks to a lot of employee stock-based compensation over the last few years. In the recently wrapped fiscal year, Snowflake doled out $862 million of stock-based comp, worth 1.8% of the current market cap. 

All on its own, stock-based comp isn't a reason to write off Snowflake entirely. But with the problem ongoing, it's worth noting how this metric might affect you as a shareholder. Basically, the 'flake is getting bigger -- but at least up until now, your slice of it has gotten slightly smaller as a percentage of the total (more in a moment). 

For fiscal year 2024 (the 12 month period that will end next January), management said it expects total shares outstanding on an adjusted basis (which includes potentially dilutive securities like outstanding stock options) will be 363 million, up 1.1% from 359 million at the end of this last year. It appears Snowflake is working to get stock-based comp under control, but there's work left to do here.

Is there value in the stock yet?

The good news is that Snowflake is still growing even in tough economic times -- product revenue growth is expected to be 40% in fiscal 2024. Along the way, its free cash flow profit margin metrics are expected to remain in line with where they were last year at about 25%. If Snowflake hauls in revenue of over $2.7 billion like it expects, that would equate to free cash flow of $675 million -- an amount that could go a long way toward offsetting stock-based comp, like via the recently announced $2 billion stock repurchase plan.

It's still early innings for Snowflake. Cash return (even by stock buybacks) to shareholders is not the priority here. However, that up-to-$2 billion in stock repurchases is expected to be completed within the next two years. Management is showing signs of taking shareholder returns seriously, and Snowflake could go from diluting existing shareholders' slice of the business to growing it (by reducing outstanding share count). In addition to scaling free cash flow, the balance sheet featured $4 billion in cash and short-term investments, another $1.07 billion in long-term investments, and zero debt.

Snowflake is working on getting itself more financially fit by putting expenses on ice too. For example, Snowflake highlighted migrating its workloads on Amazon's (AMZN -2.64%) cloud computing business, AWS, over to the in-house AWS-designed Graviton-2 processors. AWS has been touting its custom chips as a way for cloud customers to save operating costs. There is still a very long runway of growth ahead in the cloud industry, so Snowflake's renewed partnership with AWS (and its ability to work agnostically on all public cloud services like Microsoft's (NASDAQ: MSFT) Azure and Alphabet's (NASDAQ: GOOGL)(NASDAQ: GOOG) Google Cloud) puts it in a great place.

Is there value in buying Snowflake now? I'd say maybe. Shares trade for 70 times expected fiscal 2024 free cash flow. Given how critical data is to the economy these days, it's hard to argue against at least being interested in Snowflake, assuming you're buying and planning to hold for the very long term (five years and no less, in my estimation). Your ability to do so will greatly depend on your ability to ignore a lot of noise in the coming years.

But there are a lot of compelling values out there right now in the cloud computing market. Same as I declared it last autumn, I file Snowflake under the same category as other high-growth but richly valued tech stocks: Nibble only, perhaps using a dollar-cost averaging plan to build up to a larger position over time, if you really want to buy now.