It's fine to want to be like Buffett, but consider your position sizing with SNOW stock
When Berkshire Hathaway(NYSE:BRK-A, NYSE:BRK-B) CEO Warren Buffett loads up on a stock, you might be tempted to do what he does. That’s understandable, as Buffett is a legendary investor. However, there’s a red flag with Snowflake (NYSE:SNOW) that prospective shareholders must consider, so don’t over-leverage yourself on SNOW stock.
Snowflake is a cloud computing company that helps its customers, mostly business clients, store their data. As we’ll discuss in a moment, Buffett isn’t the only well-known financier with a share position in Snowflake. Nevertheless, you’ll definitely want to learn all of the relevant facts, both the good ones and the not-so-good ones, before deciding whether to invest in Snowflake.
Which Famous Investors Bought SNOW Stock?
Buffett and Citadel founder and CEOKen Griffin don’t necessarily have a lot in common, but they apparently both envision a bright future for Snowflake. Reportedly, Buffett owns a whopping 6,125,375 shares while Griffin’s firm holds 838,521 shares of SNOW stock.
The problem is, there’s no way to know for certain exactly why Buffett and Griffin bought Snowflake shares. After all, 13-F filings only reveal the what and how much, maybe the when, but never the why.
We’re all certainly free to make educated guesses, though. I suspect that Buffett and Griffin want exposure to artificial intelligence (AI) technology. HSBC (NYSE:HSBC) analyst Stephen Bersey observed Snowflake’s “global investment spend on AI.” Thus, Bersey drew a seemingly bullish conclusion:
“We see Snowflake as one of the early beneficiaries to this increase in spending as the company’s product portfolio is focused on the critical component of AI, large datasets.”
He then went on to assigned a “buy” rating and an ambitious $201 price target on SNOW stock. So now, it’s starting to make sense that financial superstars like Buffett and Griffin would want to invest in Snowflake in 2023.
Snowflake’s Slowing Revenue Growth Is a Concern
It’s actually pretty easy to build a bull case for Snowflake. Along with the AI-market exposure, investors might like Snowflake because the company has a good track record of quarterly EPS forecast beats.
Furthermore, Snowflake reported year-over-year product revenue growth of 37% in the second quarter of fiscal 2024. This might not be as impressive as it seems, though.
InvestorPlace contributor Marc Guberti caught something that I missed. Specifically, Snowflake’s aforementioned 37% revenue increase represents a “deceleration from the 48% revenue growth in FY Q1 2024, 53% revenue growth in FY Q4 2023, and 67% revenue growth in FY Q3 2023.”
That’s not a positive sign, you must admit. Moreover, I found out that there’s been some insider share selling going on. In particular, Snowflake Lead Independent Director Michael Speiser reportedly sold $89 million worth of SNOW stock shares during the past 12 months. Does Speiser know something that Buffett and Griffin don’t?
Take It Slow and Steady With SNOW Stock
I wouldn’t conclude from all of this that Snowflake is a failing business, by any means. A 37% year-over-year revenue increase is nothing to sneeze at. I only hope that Snowflake soon puts a stop to its revenue-growth deceleration.
With that red flag in mind, I recommend that prospective Snowflake investors should take it slow and steady. Scale into a position gradually by purchasing just a few shares of SNOW stock. You can always add to your stake later on, after re-evaluating Snowflake’s revenue-growth prospects.
On the date of publication, David Moadeldid not have (either directly or indirectly) any positions in the securities mentioned in this article.The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.
FAQs
Two famous fund managers have large share positions in Snowflake (SNOW) stock. On the other hand, investors may be concerned about Snowflake's decelerating revenue growth.
Should I hold Snowflake stock? ›
Snowflake has 30.73% upside potential, based on the analysts' average price target. Is SNOW a Buy, Sell or Hold? Snowflake has a conensus rating of Moderate Buy which is based on 24 buy ratings, 11 hold ratings and 2 sell ratings.
Why is Snowflake stock down so much? ›
Snowflake predicted full-year fiscal 2025 product revenue of $3.25 billion. This guidance falls short of the analysts' consensus estimate of $3.43 billion. Bloomberg called product revenue a “closely watched measure” for Snowflake. Hence, this helps to account for the steep drop in SNOW stock.
Who is the largest shareholder of Snowflake? ›
Vanguard owns the most shares of Snowflake (SNOW). The ownership structure can impact the company's decision making, as large institutional investors may exert influence on the company's management and can also affect the company's stock price with their buying and selling patterns.
How much Snowflake stock does Buffett own? ›
Can Snowflake be a trillion dollar company? ›
Snowflake's market cap is currently at about $65 billion. To make it to $1 trillion by the end of 2035, Snowflake stock would have to grow by an average of just over 28% per year over the next 11 years. Admittedly, its trading history does not bode well for such gains.
What is the future of Snowflake stock? ›
Future Growth
Snowflake is forecast to grow earnings and revenue by 10.4% and 18.2% per annum respectively. EPS is expected to grow by 13.3% per annum. Return on equity is forecast to be 10.4% in 3 years.
How high will Snowflake stock go? ›
Stock Price Targets
| High | $246.00 |
|---|
| Median | $210.00 |
| Low | $125.00 |
| Average | $206.83 |
| Current Price | $157.77 |
This accolade from Fortune is a testament to the incredible opportunity ahead as Snowflake empowers customers across industries to more easily mobilize data and AI for business value. “In this new AI era, generative AI and large language models will reshape how we live, work and do business.
Why did Snowflake CEO quit? ›
"Snowflake is under pressure to step up on AI, and Slootman is more of a business leader rather than a tech leader. The selection of Sridhar Ramaswamy signals the direction the board is looking to emphasize."
For fiscal 2025, Snowflake forecast product revenue growth of roughly 22% to $3.25 billion versus consensus estimates for 30% growth to $3.43 billion. In addition, Snowflake withdrew its fiscal 2029 target of $10 billion in revenue.
Is Snowflake stock overvalued? ›
Compared to the current market price of 158.13 USD, Snowflake Inc. is Overvalued by 78%.
What Fortune 500 companies use Snowflake? ›
Adobe, Albertsons Companies, AT&T, Be The Match, Capital One, Deliveroo, Doordash, HP, Instacart, JetBlue, Kraft Heinz, Mastercard, McKesson, Micron, NBC Universal, Nielsen, Novartis, Okta, PepsiCo, Pitney Bowes, Siemens, University of Notre Dame, US Foods, Western Union, Yamaha, and many more.
Who are the major investors in Snowflake? ›
Top Institutional Holders
| Holder | Shares | % Out |
|---|
| Blackrock Inc. | 15.63M | 4.68% |
| Morgan Stanley | 13.12M | 3.93% |
| Altimeter Capital Management, LP | 12.42M | 3.72% |
| Sc Us (ttgp), Ltd. | 7.55M | 2.26% |
6 more rowsBalance Sheet
The company has $3.85 billion in cash and $287.98 million in debt, giving a net cash position of $3.56 billion or $10.65 per share.
Who owns Snowflake stock? ›
Largest shareholders include Vanguard Group Inc, BlackRock Inc., Morgan Stanley, Altimeter Capital Management, LP, VTSMX - Vanguard Total Stock Market Index Fund Investor Shares, Sc Us (ttgp), Ltd., Jennison Associates Llc, State Street Corp, Berkshire Hathaway Inc, and Sands Capital Management, Llc . Snowflake Inc.
Did Berkshire sell Snowflakes? ›
Buffett's Berkshire continues to own Snowflake stock even now. Its stake in the company is now valued at $978 million, though it won't be surprising to see that figure increase thanks to solid catalysts such as artificial intelligence (AI) that could power its growth.
Who has Snowflake acquired? ›
Snowflake Announces Agreement to Acquire Samooha to Simplify Building Interoperable Data Clean Rooms in the Data Cloud. As of December 20, 2023, Snowflake's acquisition of Samooha has closed.
