A Once-in-a-Generation Investment Opportunity: 1 Growth Stock to Buy Now
Cloud-native data storage and analysis specialist Snowflake's (NYSE: SNOW) shares tanked 33% since the company released its fourth-quarter fiscal 2024 earnings report (for the period ending Jan. 31, 2024) on Feb. 28. While the company's fourth-quarter revenue and earnings surpassed consensus estimates, investors are disappointed with underwhelming guidance for fiscal 2025.
Snowflake expects technology advancements and product efficiency gains (which are being passed on to customers) to make the platform even more cost-effective for customers. This implies less spending by customers, which in turn, will affect the company's fiscal 2025 revenue. Plus, the rollout of tiered storage pricing (the company will give discounts to its customers for storing higher volumes of data) is also expected to negatively affect future revenue. Snowflake is further gearing up to make its support for the open-source Iceberg Table format generally available around June 2024. Subsequently, some large customers are expected to shift out a portion of their data from Snowflake's platform to Iceberg Tables. Besides losing some storage revenue, the company also expects to lose some compute revenue since a few workloads can run directly on Iceberg Tables.
While the near-term impact of these challenges cannot be ignored, these initiatives are expected to bring more customers and workloads to Snowflake's platform in the long run. Even if these strategies do not succeed, there is still much to like in this stock.
Source Fool.com
