Snowflake (NYSE:SNOW) shares bounced 16% in trading yesterday to close at $360. This comes after stronger than expected Q3 results.

Quarterly revenue grew by 110%, with a healthy gross profit margin of 70%. Looking ahead, the outlook for Q4 is for revenue to come in around $350m, which would be up a further 12% from the Q3 figure.

This gives us reasons to be positive, although ultimately the business remains loss making. For investors that see the company breaking even in coming years, there’s clear value in buying shares. However, we do note the hefty premium already attached to shares at $360.

With a market cap of $120bn, the price to sales ratio comes in at 128. This is very high, with our team usually looking for a figure between 1-4.

We’re currently on the fence regarding Snowflake shares at $360. Clearly, some other smart investors (cough Warren Buffett cough) don’t agree with us, so make up your own mind.

AlphaPicks does not own a position in SNOW. Register here with our preferred investment partner, EToro.

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