Snowflake’s Customers’ Caution Seeps Into Outlook; FVE Cut to $258 but Shares Still a Confident Buy

No-moat Snowflake had a mixed quarter, beating our top-line estimates slightly while coming in under our earnings per share forecast. Guidance for the year was conservative, as Snowflake stressed its customers’ cautious spending trends at this time. As a result, we are lowering our fair value estimate for Snowflake to $258 from $295 per share. While we have baked in less growth in the near term based on the macroenvironment, we are still convinced Snowflake boasts incredible opportunity to come, with particular upside from its data marketplace—which only accounts for a small portion of revenue at the moment. We continue to believe Snowflake stock is attractively priced for the long-term investor who is looking to get high-quality exposure to the nascent and booming data lake and data warehouse space, which we believe is moaty by nature. Altogether, we think the market is too heavily discounting the early mover advantage Snowflake has, which implies a snowball effect to market size, in our view.