Usually we say, “Make it rain”… but right now, it’s time to “Let it snow.”
Snowflake (SNOW), one of 2020’s most highly anticipated unicorn IPOs and certainly the biggest software IPO of all time, just went public yesterday.
As a cloud company, it’s part of one of the most exciting and fastest growing areas of the tech sector.
The company has been outperforming Amazon (AMZN), Alphabet (GOOG), and Microsoft (MSFT) and become the top data warehouse company.
That’s evidenced by the 3,100 customers they have already— including Capital One, which ushers in 11% of Snowflakes revenues.
Revenues have been growing enormously for Snowflake — 174% over the past year—
and this 5 years old company anticipates $800 million in revenue during the next 12 month period.
So it’s no surprise why the stock has created a massive enthusiasm and demand among investors and toppled the initial expected price range of $70 to $80.
Even Warren Buffet and Salesforce.com (CRM) want in… for $550 million and $250 million, respectively.
SNOW already got a super hot—or should I say frosty?— start yesterday.
So, I want to share what specifically makes SNOW a buy and what I’m looking at from a trade perspective.
SNOW Provides In-Demand Cloud Solutions for Data Warehousing
Snowflake (SNOW) is in a unique position to take advantage of recent technological shifts in the way we live and work.
The rise of internet connected devices and enterprise software has produced a greater level of data in the past 2 years than all of history.
With things trending to remote work situations because of the pandemic, the need for Cloud service providers like SNOW has been even more so magnified.
Companies especially need help setting up networks on web-based platforms and pulling insights and building applications out of all of that data.
SNOW takes massive pools of data across various company departments and organizes them into “data warehouses.”
That makes the information searchable, useful — most notably, analytical, as it enables quick and efficient research on any data.
And instead of companies having to rely on a variety of cloud service providers, Snowflake provides a one-fits-all, turnkey cloud-based solution.
SNOW Differentiates Itself in the Cloud Space
Snowflake’s product is basically a cloud on steroids.
Traditionally, most vital data manipulations— storage, computation, and cloud services— had to be done separately, adding tons of complexity and computational power to big data tasks.
And then Snowflake Inc. came along and put them all in one place!
Per company’s own description, its idea is to “enable users to simultaneously access common data sets for many use cases without latency.”
Having spent over 2 years in shadow mode, the company went public with their technology in 2014, and has been making headlines ever since.
Their technology partners and alliances feature the biggest cloud players in the field: Amazon’s AWS, Microsoft’s Azure, Salesforce, and Google… just to name a few.
Just as impressive is their customer list— Netflix, Adobe, Doordash, Logitech, Huly, Electronic Arts, you name it!
What Do the Numbers Say about SNOW?
The company’s been incredibly successful at raising cash long before its IPO.
It’s latest funding round took place this February and added $478.8M to Snowflakes’ balance sheet— at a valuation of over $12B!
In total, since inception the company has gotten over $1.4B from private investors.
What exactly were these people paying for?
The company’s revenues shot up from $96.7M in FY19 to over $264M in FY20.
In the meantime it’s net loss— yes, as most others in the sector, the company is still losing money— decreased from $177M to $171M respectively.
This indicated huge improvement in operating margins— is something investors are always very excited about.
How Am I Trading SNOW?
The most important piece of IPO info for us, as traders, is the amount of excitement.
A stock that’s so hyped up and upsold even before it’s first public print – simply will not trade based on its fundamental business.
Surely not in the first few sessions, and possibly not in the first few weeks and even months.
SNOW is going to be a purely speculative trading vehicle with price action driven by emotions above all. Think TWTR, TLRY, BYND and many others.
It’s not hard to see what we mean when you look at its debut— stock went from very generous $240 to bizzare $319 in less than 3 full minutes of trading!!!
While it’s perfectly reasonable to lean short on something that’s been up so much and so quickly – keep TSLAin mind every time you want to get biased.
As of now we’re very interested in all intraday setups it will give— but even more so, we’re interested in managing our risk and not letting a conviction trade destroy us.
I just gave SNOW a“green light.”
To see exactly how I’m trading SNOW, join my premium IPO Payday service here.