Snowflake stock (NYSE:SNOW) has declined by about 8% over the last week and remains down by about 6% over the past month (about 21 trading days), compared to the broader indices which were up over the same period. Although there haven’t been too many developments specific to Snowflake, earnings reports from key public cloud players – whose platforms Snowflake’s tools work with – have been worse than expected. For example, Microsoft’s Azure revenue grew 35% year-over-year in the most recent quarter, about 2% below expectations, and down from about 40% growth in the June quarter. Guidance was also lighter than expected. Investors see this as a negative for Snowflake, as the company’s data warehousing business has a consumption-based model which is dependent on overall cloud demand. Core U.S. inflation numbers for September also came in higher than expected, touching 40-year highs, and this also continues to weigh on high-multiple stocks such as Snowflake.
Now that Snowflake stock has seen a decline of about 6% over the last month, will it continue its downward trajectory in the near term, or is a rally imminent? Going by historical performance, there is a roughly equal chance of a rise or a decline in Snowflake stock over the next month. Out of 159 instances in the last two years that Snowflake stock saw a twenty-one-day decline of 6% or more, 78 of them resulted in the stock rising over the subsequent month (21 trading days). This historical pattern reflects 78 out of 159, or about 49% chance of a rise in Snowflake stock over the coming month, implying a neutral near-term outlook for the stock. See our analysis on Snowflake Stock Chance of A Rise for more details.
Calculation of ‘Event Probability’ and ‘Chance of Rise’ using the last two years data
- After moving -8% or more over five days, the stock rose in the next five days on 62% of the occasions.
- After moving -4% or more over ten days, the stock rose in the next ten days on 47% of the occasions
- After moving -6% or more over a twenty-one-day period, the stock rose in the next twenty-one days on 49% of the occasions.
This pattern suggests that it is not too likely that Snowflake stock will see gains in the near term.
|S&P 500 Return||0%||-19%||73%|
|Trefis Multi-Strategy Portfolio||0%||-22%||208%|
 Month-to-date and year-to-date as of 11/1/2022
 Cumulative total returns since the end of 2016