I was really tired of all the FSLY chatter so thought I would take it upon myself to start a Snowflake thread. I just started a small position in this and I am considering adding more.
For those that don’t know:
SNOW or Snowflake Inc. is a cloud-based data-warehousing company that was founded in 2012. It has raised more than $1.4 billion in venture capital, and is based in San Mateo, California. It was publicly launched by Bob Muglia in 2014 after two years in stealth mode. Snowflake offers a cloud-based data storage and analytics service, generally termed “data warehouse-as-a-service”. It allows corporate users to store and analyze data using cloud-based hardware and software. Snowflake runs on Amazon S3 since 2014, on Microsoft Azure since 2018 and on the Google Cloud Platform since 2019. Its Snowflake Data Exchange allows customers to discover, exchange and securely share data.
It went public only a few weeks ago and Warre Buffett of all people was in on the IPO. The growth numbers they report are crazy, second only to ZM.
NET INCOME -77.63M
NET PROFIT MARGIN -58.31%
OPERATING INCOME -77.68M
But of course, the big question is, is SNOW overvalued? Many say yes. Today it’s valued at 73.57B which is 182 times trailing-12-month sales of $402.7 million. Full-year revenue is a forecast at $565.8 million, which knocks it down to 130 times 12-month revenues but still gives it a rich valuation. And it’s higher than ZM which is at 100 times 12-month trailing revenues today.
But, the difference between SNOW and ZM is:
- SNOW has high switching costs, anyone can swap out ZM if they want and try an alternative
- SNOW usage-based model, as opposed to a fixed price like ZM
- SNOW provides core services that keep operations up and running, ZM does not
I am considering adding more. I like to nibble here and there as I get more positive feedback building a position over time. I was curious about what other people thought?