Currently trading at $247.67, cloud services provider Snowflake (SNOW) has attracted significant investor attention lately because of its impressive revenue performance in its last reported quarter. However, given that the company’s current valuation is not justified by its negative profit margin, can the stock keep rallying in the near term? Read on.The price of shares of Snowflake Inc. (SNOW), a cloud computing-based data platform operating in the United States and internationally, has risen 7.5% over the past month on investors’ optimism over the company’s triple-digit growth in product revenue in its last reported quarter.
However, SNOW’s stock price has tumbled 12.2% year-to-date and 23.5% over the past six months. In fact, the stock closed yesterday’s trading session at $247.67, 42.3% below its 52-week high of $429.
So, while the San Mateo, Calif. company’s revenue growth remains strong, its net loss and operating loss have widened significantly in the first quarter of its fiscal year 2022. In addition to that, we think that in the highly competitive cloud-computing space, SNOW’s lofty valuation and negative profit margin make its stock susceptible to a price pullback.