SNOW: Unusual Volume Signals Potential Turning Point

Price Action Analysis

The daily chart shows a period of consolidation followed by a sharp increase in volume and a price drop in early December. Prior to this, from early September to early November, the price experienced a general uptrend, peaking around $280. Since then, it has been in a downtrend, with several attempts to rally failing to sustain momentum. The recent surge in volume, coinciding with a price decrease, could indicate selling pressure or a significant event.

The weekly chart reveals a longer-term uptrend from the lows of around $100 in mid-2022, with significant gains achieved throughout 2023. However, recent weeks show increased choppiness and a potential top forming, with prices struggling to break above the $280-$290 range. The elevated volume on the daily chart appears to be an anomaly within the context of the typically lower weekly volumes.

News & Catalysts

"Snowflake Stock Falls After Announcing Expanded Cloud Partnership" (Source: CNBC, Date: December 1, 2023) - This headline suggests that an expansion of a cloud partnership, often viewed positively, led to a negative market reaction. The stock's price decline on high volume indicates that investors may have been disappointed with the specifics of the partnership, its financial implications, or perhaps saw it as a signal of increased competition or a need to invest more aggressively in cloud infrastructure.
"Analysts Weigh In on Snowflake's Q3 Earnings Beat and Future Outlook" (Source: MarketWatch, Date: November 30, 2023) - Following Snowflake's third-quarter earnings report, analysts provided mixed reactions. While the company may have beaten estimates, concerns about future growth, profitability, or competitive pressures could have led to a cautious or negative sentiment, influencing the subsequent price action and volume.
"Snowflake (SNOW) Secures New Deals with Major Enterprises" (Source: Investor's Business Daily, Date: November 28, 2023) - This news highlights new business wins, which should ideally be positive. However, if these deals were smaller than anticipated or came with less favorable terms, the market might have interpreted them as less impactful than expected, contributing to the recent sell-off.

These news items, particularly the partnership announcement and the analyst reactions to Q3 earnings, likely contributed to the recent trading activity. The high volume suggests a significant response from market participants to these developments, leading to increased selling pressure and a noticeable price drop.

Fondamental analysis

Metric	Value	Period
Price to Sales (TTM)	25.88	TTM
Gross Profit Margin (TTM)	65.15%	TTM
Net Income (TTM)	-530.6 M	TTM
Revenue Growth (YoY)	32.29%	TTM
Total Debt/Equity	0.00	TTM

Key Takeaways:

Snowflake operates with strong gross margins, indicating efficient cost management in its core services.
Despite significant revenue growth, the company is still unprofitable on a net income basis, which is common for high-growth technology companies investing heavily in expansion.
The Price to Sales ratio is high, suggesting that the market has high expectations for future growth and profitability.
The company has a very clean balance sheet with no debt, providing financial flexibility.

Earnings Estimates:

Current Quarter (Q1 FY2025): Analysts estimate an average EPS of $0.2756, with a range from $0.23 to $0.38. Revenue is expected to average $1.255 billion.
Next Quarter (Q2 FY2025): Estimated EPS is $0.3356, with revenue projected to average $1.308 billion.
Full Year (FY2025): Average EPS estimate is $1.21288, and revenue is projected to average $4.654 billion.
Next Year (FY2026): Average EPS estimate is $1.6434, with revenue projected to average $5.770 billion.

EPS Trend: The EPS trend shows a slight decline in the current quarter's estimate but a positive outlook for the next quarter and full years.

EPS Revisions: There has been a significant number of downward revisions for the current quarter's EPS (28 down, 6 up), while revisions for future quarters and years are more mixed or positive.

Analyst Recommendations: The consensus among analysts is predominantly 'Buy' (32) and 'Hold' (7), with a few 'Strong Buy' (10) ratings. There is one 'Sell' and one 'Strong Sell' rating.

Analyst Price Targets: The current stock price is around $228.79. Analyst price targets range from a low of $170 to a high of $500, with a median target of $282.5 and a mean target of $281.73. This suggests an average upside potential of approximately 23% from the current price.

Market & Sentiment Context

Market Context: Snowflake operates in the cloud data warehousing and analytics space, a rapidly growing sector. However, it faces intense competition from major cloud providers (AWS, Azure, Google Cloud) and other specialized data platforms. The broader market sentiment towards technology and growth stocks can significantly influence SNOW's valuation. Recent economic uncertainty and rising interest rates may also pressure companies with high valuations.

Investor Sentiment: The unusually high trading volume on the daily chart, coinciding with a price decline, suggests strong selling pressure. This could be driven by negative reactions to recent news, profit-taking after a significant run-up, or a broader market rotation away from growth stocks. The mixed analyst revisions for the current quarter's EPS, despite positive long-term estimates, may be contributing to cautious sentiment. However, the predominantly "Buy" ratings and a median price target significantly above the current price suggest that many analysts remain optimistic about the company's long-term prospects.

Investment Outlook

Snowflake is positioned in a high-growth market, and its technology is in demand. The company's strong revenue growth and robust gross margins are positive indicators. However, the current unprofitability and high valuation multiples warrant a cautious approach. The recent price action and volume suggest that the market is reassessing the stock's valuation in light of current macroeconomic conditions and competitive pressures.

The wide range of analyst price targets indicates a degree of uncertainty regarding the company's future performance and valuation. While the median target suggests significant upside, the lower end of the targets and the recent price drop highlight potential downside risks. Investors should monitor upcoming earnings reports closely for signs of sustained growth, improving profitability, and competitive positioning.

Key Buy/Sell Levels

The current price of Snowflake Inc. (SNOW) is $228.79.

Support Levels:

$215 - $220 Zone: This area represents a significant prior resistance level that has recently been broken to the downside. The current price is trading within this range. The sharp increase in volume on the daily chart occurred around this price area, indicating significant trading activity. This zone also appears to coincide with a cluster of previous price lows on the weekly chart, suggesting it could act as a support level.
- Touched: Yes.
- Distance from current price: N/A (currently within this zone).
$190 - $200 Zone: This is a major psychological and historical support level. The price experienced a sharp decline to this area in late 2022 and early 2023, and it acted as a strong base for the subsequent rally. A retest of this level would represent a significant pullback from current prices.
- Touched: No.
- Distance from current price: $28.79 - $38.79 ($28.79 - 12.58% to $38.79 - 16.95%).

Resistance Levels:

$235 - $240 Zone: This area represents the previous day's closing price and the recent daily high. It is the immediate resistance that the price needs to overcome to show signs of a short-term recovery.
- Touched: Yes (tested today).
- Distance from current price: N/A.
$255 - $260 Zone: This area was a significant support level during the recent uptrend that has now turned into resistance. The price has struggled to move above this level in recent trading.
- Touched: No.
- Distance from current price: $26.21 - $31.21 ($26.21 - 11.46% to $31.21 - 13.64%).
$275 - $280 Zone: This represents the all-time highs reached in early November. Breaking and holding above this level would signal a resumption of the longer-term uptrend.
- Touched: No.
- Distance from current price: $46.21 - $51.21 ($46.21 - 20.19% to $51.21 - 22.38%).

These levels correspond to previous areas of support and resistance, and potential turning points identified on the charts. The $215-$220 zone is currently being tested and has historically served as both support and resistance. The $190-$200 zone is a more significant support level, representing a deeper potential pullback. On the resistance side, the $235-$240 zone is the immediate hurdle, followed by $255-$260 and the all-time highs around $275-$280.

Summary & Takeaways

Snowflake Inc. (SNOW) is exhibiting significant trading volume accompanied by a price decline, suggesting potential bearish sentiment or a reaction to recent news regarding cloud partnerships and analyst earnings expectations. Despite a strong long-term growth trajectory and robust gross margins, the company's high valuation and current unprofitability remain key concerns. While analysts maintain a generally positive outlook with a median price target suggesting upside potential, the recent price action and mixed EPS revisions warrant caution. Key support levels to watch are $215-$220 and $190-$200, while immediate resistance lies at $235-$240, followed by $255-$260 and the $275-$280 all-time high area. Investors should closely monitor future earnings reports and management guidance for clarity on sustained growth and profitability.