SNOW Leaps 16% In One Month, Wait For A Dip To Buy The Stock

We believe there are only a couple of things to fear in SNOW stock given its overall Strong operating performance and financial condition. But given its Very High valuation, the stock appears Relatively Expensive. Here is our multi-factor assessment.

But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio and is designed to reduce stock-specific risk while giving upside exposure

Let’s get into details of each of the assessed factors but before that, for quick background: With $75 Bil in market cap, Snowflake provides a cloud-based data platform that consolidates data into a single source of truth to drive meaningful business insights globally.

[1] Valuation Looks Very High

This table highlights how SNOW is valued vs broader market. For more details see: SNOW Valuation Ratios

[2] Growth Is Very Strong

• Snowflake has seen its top line grow at an average rate of 36.3% over the last 3 years
• Its revenues have grown 28% from $3.2 Bil to $4.1 Bil in the last 12 months
• Also, its quarterly revenues grew 31.8% to $1.1 Bil in the most recent quarter from $869 Mil a year ago.

This table highlights how SNOW is growing vs broader market. For more details see: SNOW Revenue Comparison

[3] Profitability Appears Very Weak

• SNOW last 12 month operating income was $-1.5 Bil representing operating margin of -37.4%
• With cash flow margin of 20.4%, it generated nearly $838 Mil in operating cash flow over this period
• For the same period, SNOW generated nearly $-1.4 Bil in net income, suggesting net margin of about -33.5%

This table highlights how SNOW profitability vs broader market. For more details see: SNOW Operating Income Comparison

[4] Financial Stability Looks Very Strong

• SNOW Debt was $2.7 Bil at the end of the most recent quarter, while its current Market Cap is $75 Bil. This implies Debt-to-Equity Ratio of 3.6%
• SNOW Cash (including cash equivalents) makes up $3.6 Bil of $8.2 Bil in total Assets. This yields a Cash-to-Assets Ratio of 43.8%

[4] Downturn Resilience Is Weak

SNOW has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• SNOW stock fell 71.8% from a high of $401.89 on 16 November 2021 to $113.30 on 13 June 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $241.00 on 28 August 2025 , and currently trades at $224.53

 
2020 Covid Pandemic

• SNOW stock fell 27.8% from a high of $390.00 on 8 December 2020 to $281.40 on 31 December 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 15 November 2021

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read SNOW Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.