SNOW Stock Eyes Best Day Since 2020 IPO As Q1 Report, Raised Guidance Ease SAAS Slowdown Fears

• SNOW up 35% in Thursday’s premarket trading.
• Upbeat results and guidance allay some fears in the broader software sector.
• Stocktwits sentiment for SNOW shifted to ‘extremely bullish’ from ‘bullish.’

Snowflake, Inc. shares jumped 35% in premarket trading on Thursday after the company reported upbeat quarterly results, raised its annual forecast, and announced a $6-billion, five-year deal with Amazon Web Services, sharply boosting optimism among retail traders.

If the gains hold in the regular session, it would mark SNOW’s best single-day performance since the cloud application company’s initial public offering in September 2020.

Snowflake is among the software companies whose shares had come under significant pressure in recent months amid fears that AI tools could erode demand for niche software, and its upbeat report helped ease some of those concerns.

As of its last close, SNOW stock had declined 20% year to date, while the SaaS-sector benchmark, the iShares Expanded Tech-Software Sector ETF (IGV), was down 12%.

Fellow software major Salesforce also reported mixed results on Wednesday, and its shares were down 1% in Thursday’s premarket.

SNOW’s Q1 Results

Snowflake’s fiscal first quarter revenue increased 33% to $1.39 billion, beating analysts’ estimate of $.13 billion. Adjusted profit of $0.39 per share also came in higher than expectations of $0.32.

The company forecast second-quarter product revenue between $1.415 billion and $1.42 billion, well above the analyst consensus of $1.37 billion.

"AI continues to accelerate our core data platform business as customers move to Snowflake with increasing urgency," CFO Brian Robins said in a statement. 

“We now have 779 customers spending more than $1 million on a trailing 12-month basis, 46 of which crossed the threshold in Q1, compared to 26 a year ago. Given the strong momentum across both our core platform business and AI business, we are raising our full-year product revenue guidance.”

The company now expects product revenue totaling $5.84 billion, up from its previous $5.66 billion view and above Wall Street's $5.67 billion target.

Retail, Analyst View On SNOW

On Stocktwits, the retail sentiment for SNOW shifted to ‘extremely bullish’ early Thursday, up from ‘bullish’ the previous day, and 24-hour message volume rose over 2,500%.

Although several users posted upbeat commentary for the stock, some saw the stock move as exaggerated and considered taking a short position. “$CRM big jump. Wondering to add short here just as a trade. What do you all think,” said a trader.

Others said the parabolic rise is likely a short squeeze. “$CRM is now insanely overvalued in my opinion. I think the spike is magnified by short covering. I will be shocked if it holds these levels over the next 2-3 days,” a trader said.

Notably, short interest in SNOW has climbed in recent months and was near an all-time high at 5% on Wednesday, per Koyfin data. 

“We find these results comforting amid recent software selling pressures, as SNOW continues positioning as a net beneficiary of rapidly improving AI capabilities,” CFRA Research analysts said in an investor note. 

Snowflake competes with Databricks, Amazon Redshift, Google BigQuery, and Microsoft Azure Synapse in cloud data warehousing and analytics. 

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