Snowflake (SNOW): Assessing Valuation After Recent Share Price Momentum

Snowflake (SNOW) shares moved slightly higher today, with the stock climbing around 0.3% to close at $240.74. Investors appear to be weighing recent trading activity, following a roughly 10% gain over the past month.

See our latest analysis for Snowflake.

Snowflake’s recent momentum is hard to ignore, with a 1-year total shareholder return of over 100% and the share price up more than 50% year-to-date. This performance highlights renewed optimism around its growth prospects and suggests that investor sentiment is strengthening, especially following this month’s notable double-digit share price jump.

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With Snowflake posting impressive returns and trading just under analyst price targets, the question for investors is clear: are shares still undervalued, or has the market already factored in all the future growth potential?

Most Popular Narrative: 8.6% Undervalued

Snowflake’s most-followed narrative points to a fair value noticeably above the latest closing price of $240.74. The stage is set by robust recent performance and big expectations riding on platform innovation.

*Rapid product innovation, including the launch of ~250 new features and expanded offerings such as Snowflake Intelligence, Cortex AI SQL, and Postgres support, is increasing average revenue per user and deepening customer stickiness. This is expected to drive recurring revenue and long-term topline growth.*

Read the complete narrative.

Want to know exactly which quantitative levers this narrative is betting on? Behind the headline, it’s all about hypergrowth in revenue, margins, and an aggressive future profit multiple. There is also the financial leap needed to justify this price. Unpack which pivotal assumptions turbocharge that fair value and see if your own forecast would match.

Result: Fair Value of $263.43 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Snowflake’s heavy reliance on migration-driven growth and intensifying competition from major cloud providers could pose challenges to its long-term revenue expansion.

Find out about the key risks to this Snowflake narrative.

Another View: SWS DCF Model Suggests Overvaluation

While analyst narratives see Snowflake as undervalued, our SWS DCF model presents a different picture. Based on discounted future cash flows, Snowflake's fair value is calculated at $177.58 per share, which is well below current levels and signals potential overvaluation. How much weight should investors place on cash flow forecasts compared to market optimism?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own Snowflake Narrative

If these conclusions do not match your view, you can dig into the fundamentals yourself and build your own perspective in just a few minutes. Do it your way

A great starting point for your Snowflake research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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