How Will Snowflake Stock React To Its Upcoming Earnings?

Cloud data warehousing major Snowflake (NYSE:SNOW) is set to report its Q1 FY’26 (quarter ending April 2025) earnings on May 21, reporting on a quarter that is likely to see the company continue to benefit from its push to offer artificial intelligence tools to its customers. Revenues are expected to rise 21% year-over-year to about $1 billion per consensus estimates, while adjusted earnings are projected at $0.21 per share, up 50% year-over-year. Snowflake has been growing its AI capabilities via strategic initiatives, including a multiyear partnership with Anthropic and the acquisition of AI startup Datavolo. By combining these AI capabilities with the company’s core data warehousing platform,  Snowflake is making it easier for customers to build and run AI applications without moving their data around. This tight integration could save customers time and reduce overall complexity. Snowflake has guided product revenues to range between $955 million to $961 million for the quarter.

The company has $61 billion in current market capitalization. Revenue over the last twelve months was $3.6 billion, and it was operationally loss-making with $-1.5 Bil in operating losses and net income of $-1.3 Bil. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative, having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

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Snowflake’s Historical Odds Of Positive Post-Earnings Return

Some observations on one-day (1D) post-earnings returns:

• There are 18 earnings data points recorded over the last five years, with 10 positive and 8 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 56% of the time.
• However, this percentage decreases to 42% if we consider data for the last 3 years instead of 5.
• Median of the 10 positive returns = 7.7%, and median of the 8 negative returns = -14%

Additional data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.

Correlation Between 1D, 5D, and 21D Historical Returns

A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if the 1D post-earnings return is positive. Here is some correlation data based on 5-year and a 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.

Is There Any Correlation With Peer Earnings?

Sometimes, peer performance can have influence on post-earnings stock reaction. In fact, the pricing-in might begin before the earnings are announced. Here is some historical data on the past post-earnings performance of Snowflake stock compared with the stock performance of peers that reported earnings just before Snowflake. For fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.

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