Snowflake Stock Just Took a Hit: 3 Reasons I'm Not Buying the Dip

Core Viewpoint - Snowflake reported a fiscal third-quarter loss despite impressive revenue growth, leading to a decline in stock price as the market reacts to its high valuation and ongoing net losses [1][2]. Financial Performance - Fiscal Q3 revenue increased by 29% year over year to $1.21 billion, but the company reported a GAAP net loss of $294 million, slightly better than the $324 million loss in the same quarter of the previous year [4][5]. - For the first nine months of fiscal 2026, Snowflake's GAAP net loss reached approximately $1.02 billion, compared to about $958 million in the same period a year earlier [5]. - Stock-based compensation was a significant expense, totaling $442 million in the quarter, which is over one-third of revenue [6]. Growth Trends - Product revenue rose 29% year over year to $1.16 billion in fiscal Q3, down from 32% growth in fiscal Q2, indicating a deceleration in growth [9][10]. - Management's guidance for fiscal Q4 product revenue is between $1.195 billion and $1.2 billion, suggesting a growth rate of about 27% from the prior year [9]. Valuation Concerns - Snowflake's shares are trading at approximately 20 times sales, despite the company continuing to report significant losses, indicating that the market has priced in expectations for strong future revenue growth and profitability [11][12]. - The current valuation leaves limited room for potential missteps, such as slower adoption of AI offerings or a significant deceleration in revenue growth [12].