Is Snowflake a Good Investment?

PHOTO CREDIT: Snowflake

OVERVIEW

Snowflake Incorporation is a company based in the United States. The company offers cloud-based services for companies around the world. Through the Snowflake cloud, companies of all sizes can consolidate and analyze data. The company was founded in 2012.

Why You Should?

  1. Snowflake is a great growth stock in an investors portfolio. As the company continues to further develop its products and as investors will return to investing in these “super-growth” stocks, the company’s stock price will continue to rise. This will benefit the company and its investors.
  2. The COVID-19 pandemic has benefited the company as businesses around the world look for ways to better extract and analyze information from data. Furthermore, using the services that Snowflake provides is one of the many ways of how companies can modernize and digitize their businesses for the future as well. This will benefit the company and its investors.
  3. Snowflake is part of a growing industry. The cloud and SaaS (software as a service) industries are going to be hundreds of billions of dollars (if not trillions of dollars) in the future due to the reasons mentioned above. This will benefit the company and its investors in the future.

Why You Should Not?

  1. Snowflake has to deal with a lot of competition in this industry. Some of these companies include Amazon, Google, IBM, and many others as well. This competition has hurt the company in the past and might continue to hurt the company and its inventors in the future as well.
  2. Snowflake has an extremely overvalued stock. The company is valued at over 52 billion dollars at around 240 dollars a stock. This is for a company which is not the best cloud company in the world and a company that has never turned a profit. This causes more volatility in the company’s stock price and will hurt the company and its investors in the future.
  3. The stock market has fallen (especially the technology sector) as interest rates have risen over the past couple of weeks. This is because large investors are selling these stocks in favor for more stable bonds. This might hurt the company and its investors in the short to mid-term as this technology stock glut continues.
  4. The company has seen rising revenues over the past couple of years. However, the company has also reported rising losses over the same time period. This has hurt the company as it is finding ways to turn a profit (or reduce losses) and its investors. In the financial year of 2021, the company reported revenues of around 592 million but a massive loss of around 539 million. In the financial year of 2020, the company reported revenues of around 264.75 million but another massive loss of around 348 million.
PHOTO CREDIT: Yahoo Finance

MY OPINION

I think that investors should hold off on investing in a company like Snowflake at the moment. This is because of tough competition, an overvalued stock price, rising interest rates, as well as lackluster profits. However, the company is a good growth opportunity for long-term investors, positive impacts from the COVID-19 pandemic, and its position in a growing industry will benefit the company.

--

--

--

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

Towards Sustainable Development In Aba Using Technology

Mobile ID to Help Facilitate Banking for the Unbanked

The Evolution of B2B Sales since 1990

Developing a Business Improvement District in the Biggest Little City

How brands in the consumer goods industry strive in hostile environments.

What’s Not Going to Change in Ecommerce in the Next 10 Years

The Art Of Marketing For Industrial Enterprises

Starbucks proves brands can’t build “belonging” without beating bias too

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

More from Medium

F1 Preseason GFT AI Driver Rankings: Verstappen P1, New Names in Top Ten

Installing Lazy Predict on Apple Silicon

On-Shelf Availability: Predicting Out-Of-Stock Situations, Fueling Profitability and Preventing…

Numerically Modelling Rutherford Scattering