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The cloud-based data-warehousing company Snowflake Inc. (SNOW - Free Report) shares dropped 18.1% on Feb 29, 2024, after the company reported downbeat earnings results on Feb 28 after the market closed. The company came out with a disappointing outlook and the company’s CEO stepped down. It reported quarterly earnings of $0.35 per share, beating the Zacks Consensus Estimate of $0.17 per share. This compares to earnings of $0.14 per share a year ago.
Snowflake Inc., which belongs to the Zacks Internet - Software industry, posted revenues of $774.7 million for the quarter ended January 2024, surpassing the Zacks Consensus Estimate by 1.95%. This compares to year-ago revenues of $589.01 million. The company has topped consensus revenue estimates four times over the last four quarters.
What Caused the Slump?
UBS cut the price target on Snowflake shares from $225 to $180 amid downbeat revenue guidance, per investing.com. The adjustment follows a disappointing quarterly report from the company, which revealed a lower-than-expected forecast for fiscal year 2025 product revenue growth and other concerns.
The company said product revenue in the first quarter will be between $745 million and $750 million, lower than the $759 million analysts were expecting, according to StreetAccount, as quoted on CNBC. Additionally, Snowflake said its first-quarter adjusted operating margin would be 3%, compared to analysts’ estimates of 7.2%.
Deutsche Bank too lowered its outlook on Snowflake, reducing the share price target from $250 to $220, per investing.com. Moreover, the recent quarter also witnessed the exit of Snowflake's CEO, who was succeeded by the founder and CEO of Neeva, a company Snowflake acquired last year.
ETFs in Focus
Snowflake has weights in ETFs like Spear Alpha ETF (SPRX - Free Report) (Snowflake’s weight 9.20%), TrueShares Technology, AI & Deep Learning ETF (LRNZ - Free Report) (Snowflake’s weight 6.82%) and ProShares Big Data Refiners ETF (DAT - Free Report) (Snowflake’s weight 4.93%) and AXS Esoterica NextG Economy ETF (WUGI - Free Report) (Snowflake’s weight 4.73%).
These ETFs contain several high-potential companies in their kitty. For example, the fund WUGI has current time’s red-hot stock Nvidia in its portfolio. The (artificial intelligence) AI hype in the past one year is known to all. So, is the demand for bid data and machine learning.
Investors should note that Snowflake’s share price crash caused a dip in those ETFs. This makes a great opportunity to buy the dip and grab those high-potential ETFs at a relatively low price. The SPRX is up 14.5% this year, LRNZ has advanced 9.5% in the year-to-date frame, DAT has slumped 14.1% and WUGI has surged 20.5% (as of Feb 28, 2024). Hence, investors can use the dip in Snowflake shares and buy these ETFs to gain exposure to other promising tech companies.
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Time to Buy the Dip in Snowflake ETFs?
The cloud-based data-warehousing company Snowflake Inc. (SNOW - Free Report) shares dropped 18.1% on Feb 29, 2024, after the company reported downbeat earnings results on Feb 28 after the market closed. The company came out with a disappointing outlook and the company’s CEO stepped down. It reported quarterly earnings of $0.35 per share, beating the Zacks Consensus Estimate of $0.17 per share. This compares to earnings of $0.14 per share a year ago.
Snowflake Inc., which belongs to the Zacks Internet - Software industry, posted revenues of $774.7 million for the quarter ended January 2024, surpassing the Zacks Consensus Estimate by 1.95%. This compares to year-ago revenues of $589.01 million. The company has topped consensus revenue estimates four times over the last four quarters.
What Caused the Slump?
UBS cut the price target on Snowflake shares from $225 to $180 amid downbeat revenue guidance, per investing.com. The adjustment follows a disappointing quarterly report from the company, which revealed a lower-than-expected forecast for fiscal year 2025 product revenue growth and other concerns.
The company said product revenue in the first quarter will be between $745 million and $750 million, lower than the $759 million analysts were expecting, according to StreetAccount, as quoted on CNBC. Additionally, Snowflake said its first-quarter adjusted operating margin would be 3%, compared to analysts’ estimates of 7.2%.
Deutsche Bank too lowered its outlook on Snowflake, reducing the share price target from $250 to $220, per investing.com. Moreover, the recent quarter also witnessed the exit of Snowflake's CEO, who was succeeded by the founder and CEO of Neeva, a company Snowflake acquired last year.
ETFs in Focus
Snowflake has weights in ETFs like Spear Alpha ETF (SPRX - Free Report) (Snowflake’s weight 9.20%), TrueShares Technology, AI & Deep Learning ETF (LRNZ - Free Report) (Snowflake’s weight 6.82%) and ProShares Big Data Refiners ETF (DAT - Free Report) (Snowflake’s weight 4.93%) and AXS Esoterica NextG Economy ETF (WUGI - Free Report) (Snowflake’s weight 4.73%).
These ETFs contain several high-potential companies in their kitty. For example, the fund WUGI has current time’s red-hot stock Nvidia in its portfolio. The (artificial intelligence) AI hype in the past one year is known to all. So, is the demand for bid data and machine learning.
Investors should note that Snowflake’s share price crash caused a dip in those ETFs. This makes a great opportunity to buy the dip and grab those high-potential ETFs at a relatively low price. The SPRX is up 14.5% this year, LRNZ has advanced 9.5% in the year-to-date frame, DAT has slumped 14.1% and WUGI has surged 20.5% (as of Feb 28, 2024). Hence, investors can use the dip in Snowflake shares and buy these ETFs to gain exposure to other promising tech companies.