Snowflake Stock In The Green Despite Berkshire Exit Reveal, Analyst Downgrade — Retail Remains Wary

Snowflake Inc’s (SNOW) stock climbed nearly 1% on Thursday even as its Stocktwits sentiment plunged to its lowest point of the year, hitting ‘extremely bearish’ territory (11/100).

This pessimistic outlook from retail investors comes after two negative developments for Snowflake: Warren Buffett's Berkshire Hathaway selling its entire stake in Snowflake during the last quarter and Wells Fargo downgrading it to ‘Equal Weight’ from ‘Overweight’ and slashing its price target from $200 to $130.

Wells Fargo analysts expressed concerns that Snowflake's premium valuation is difficult to justify given the "rapidly evolving era of open data formats," and questioned the company's technological edge.

They also cited new leadership, macroeconomic headwinds, and the recent data breach as additional factors contributing to a challenging period for Snowflake. Their survey suggests potential customer churn and dampened expectations following the breach.

Snowflake has lost over 47% of its value since its explosive market debut in 2020, when shares more than doubled on listing as investors splurged on cloud companies fueled by low interest rates and remote work trends.

Investors are concerned about slowing software spending by businesses and the recent hacking campaign targeting less secure customer accounts, sending Snowflake’s shares down over 30% year-to-date.

While the stock has rebounded more than 5% over the last week, retail investors on Stocktwits — where Snowflake has over 48,000 followers — remain unconvinced.

Many users see the Berkshire exit as a bad omen, believing the stock is still overvalued, and fear a potential drop if the upcoming Q2 earnings report falls short of expectations (analysts expect a profit of $0.16 per share).