by Nawtreallyme
Please stop pumping a 3.3 Billion dollar company, that just had price targets jump 75 to 120 (60% price increase) with no underlying changes to its fundamentals. Any google search will bring up a million article giving glowing praises that SNOW can be the next AAPL or MSFT, sure anything can happen, but that’s 10 years down the road if at all.
There are no options yet for this company, so there are few metrics to determine the expected moves in price, but you can do simple DD before making this sort of commitment.
Want to know how you can tell a bad buy from a good buy?
two main categories I use are
Future Growth Indicators
When gauging future growth of a company just ask yourself these questions and try to find answer.
- What are you (the investor) waiting for now that you bought 275 dollars of SNOW?
- Do they have a roadmap of future services ?
- What sort of revenue streams will they be focusing on in this pandemic, will it be investing into growing existing contract or spend liquid cash on advertising?
- Will they focus on more research and development? And if so OF WHAT?
- How will they KEEP existing revenue streams? Undercutting competition’s prices, what do previous customers think of them vs competitors?
- What sort of long term plan do they have if any for a growth from a their expected 3.3 billion dollar funding to a now
70.4 billionmarket valuation.
These are questions which are not answered yet, and If you look at the wiki for the company, all of the information will be about their IPO and valuation at launch and none of it will be about any product, service or asset they have because they don’t have any. They are an unremarkable company that has potential to carve out a piece of a field only because the field has so much growth potential.
Snowflake Inc. is a cloud-based data-warehousing startup that was founded in 2012. It has raised more than $1.4 billion in venture capital, and is based in San Mateo, California. It was publicly launched by Bob Muglia in 2014 after two years in stealth mode
Revenue $264.7 million (2019) Increase 174%
Net income -$348.5 million (2019) Decrease
Number of employees 1400 (2019)
The company’s website has glowing reviews of essentially a tailored data solution which is a service many non-publically traded contracting company’s already do. Companies get google or amazon engineers to come help to integrations when they move a certain amount of data into their respective cloud environments, its a standard element of a field that again, is still growing a lot, but not unique to this company in any way.
Risk Factors
EDIT: I want to be clear, i am pointing out what the risk is, and how poorly its mitigated, all IPOs have this.
Normally before getting into an investment you should consider risk to the company. In IPOs everything is laid naked in-front of investors when they set the price targets. On page 13 of their IPO they have a whole section listing risk factors, here is exact excerpts of that section:
We have a history of operating losses and may not achieve or sustain profitability in the future. We have experienced net losses in each period since inception.
and
In addition, our platform currently operates on public cloud infrastructure provided by Amazon Web Services (AWS), Microsoft Azure (Azure), and Google Cloud Platform (GCP), and our costs and gross margins are significantly influenced by the prices we are able to negotiate with these public cloud providers, which in certain cases are also our competitors.
You may also be asking “but they could get bought out”
Dataware houses are not sexy startups that highly innovate, most of the innovation in that field is with the experts in the field, the direct competitors to SNOW Actually, google or amazon are more likely to just hire their lead engineers at double pay and get everything they could have wanted from the company. If they were going to buy out this company they would have done it at IPO when shares were 75-85$ and asking for 3.3 billion in valuation.
Don’t get trapped in a long investment if you can’t tie up that sort of liquidity for a very long time. I am sure one day this company will wedge itself into a more serious position in the field, but right now during a pandemic that is largely impacting the state this company is from,
TLDR:
this is not an opportunity unless you are getting it at warren buffet prices.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.