Snowflake Stock Falls 10%. Know Why, And If To Buy $SNOW Post Earnings

Core Insights - Snowflake's stock experienced a significant rise of 68% for the year until December 3, but fell 10% following the release of its third-quarter earnings report [2][3] - Despite beating revenue and earnings expectations, the stock decline was attributed to product revenue guidance that was only slightly above consensus estimates, leading to investor disappointment [3][7] Financial Performance - Snowflake reported third-quarter revenue of $1.21 billion, a 29% increase year-over-year, exceeding estimates by $30 million [8] - Adjusted earnings per share (EPS) were 35 cents, surpassing expectations by four cents, and adjusted gross margin was 73%, one percentage point above consensus [8] - Free cash flow rose 9% to $113.6 million, remaining performance obligations increased by 37% to $7.88 billion, and the net retention rate was 125% [9] Product Revenue Guidance - For the current quarter, Snowflake projected product revenue guidance with a midpoint of $4.425 billion, only $12 million above estimates, which contributed to the stock's decline [10] - The company’s product revenue growth rate of 29% was slower than the previous quarter's 32%, which may have led to further investor concerns [18] AI and Strategic Partnerships - Snowflake achieved a $100 million annual recurring revenue (ARR) in AI a quarter earlier than expected, indicating strong momentum in its AI initiatives [4][11] - The company’s enterprise AI agent, Snowflake Intelligence, has seen the fastest adoption in its history, enhancing how businesses interact with data [5][12] - Snowflake's partnership with Anthropic is expected to generate $200 million over several years, while collaborations with AWS are enhancing its cloud capabilities [13][14] Analyst Perspectives - Analysts noted that Snowflake's stock was seen as undervalued by approximately 20%, with an average price target of $286 from 33 analysts [6][19] - Some analysts expressed optimism about the company's conservative guidance, suggesting steady demand in its core business and growing interest in its AI offerings [19]