5Q5 trade ideas
Should I Invest In Snowflake (SNOW)?Yesterday, Snowflake (SNOW) , one of the most anticipated IPOs in recent history, hit markets. With names like Berkshire Hathaway and Salesforce getting in on the IPO, should you be looking at SNOW as your next big investment?
Snowflake Inc. is a cloud-based data-warehousing startup that was founded in 2012, and yesterday they hit public markets. So what exactly does that mean?
What Is An Initial Public Offering (IPO)?
Well, an IPO, or Initial Public Offering, is a way for a company to raise capital in exchange for small pieces of their company called stock shares… and let’s just say that the SNOW IPO was a big one!
In fact, their IPO set a record for software companies and has been the biggest in the U.S. this year.
Originally their IPO price was supposed to be between $75-$85, but last week both Berkshire Hathaway and Salesforce committed to buying millions of shares.
Because of this, the price was then set to release between $100-$110. But when they finally started trading, it opened up at $249.99.
Within a matter of minutes it shot up as high as $318.01. That was over a 27% move within 3 minutes… crazy! That is what we call FOMO (Fear Of Missing Out) in the trading world. And that’s what tends to happen with IPOs.
By the end of yesterday’s trading, Snowflake (SNOW) closed up on the day 3.64%.
How Did The Top IPOs Of 2019 Do?
Last year we had a few noteworthy IPOs like UBER, LYFT, CHWY and PINS. So let’s take a look how all of these different stocks performed out of the gate.
First, we’ll look at UBER. Much like Snowflake (SNOW), UBER had an explosive first day of trading. Then for about two months it basically moved sideways, until its first earnings report. From there, things got pretty ugly! In a matter of months the stock went from $43 to as low as $25.58.
Now let’s take a look at their competitor, LYFT. Very much like SNOW and UBER, it too had a very volatile first day of trading but nearly immediately started moving lower. LYFT IPO’d at $87.24 in March of 2019, and by October it found a temporary bottom at $37.07.
Starting to notice a pattern yet?
Well, let’s take a look at another IPO that was really hyped last year, Chewy (CHWY). Its first day of trading was also very volatile. It opened up at $36 on its first day of trading in June of last year. By November it finally found a temporary bottom, trading as low as $21.68.
A few other great examples from last year would be Pinterest and Slack. Both acted nearly identically to the other IPOs we just discussed.
Slack was hyped up as the “Skype Killer,” and although that may turn out to be true, their stock basically went straight lower from the start.
From what I’ve seen over the last few years, this has sort of been the MO of these ultra hyped IPOs.
Taking a look at iposcoop.com you can see all the recent IPOs, and as I’m sure you’ll see, there are plenty you’ve probably never heard of before.
Will I Be Investing or Trading Snowflake (SNOW)?
So after all that discussion, should you invest in Snowflake (SNOW)? Well, ultimately that is up to you. I’m a short term trader, so I like to hold things for as little as a day or two and typically no longer than a few weeks. So for me, I will not be investing in (or trading) Snowflake.
If you’ve followed me for any length time you’ve probably heard me say:
Trade What You SEE, Not What You Think.
And for me, I don’t SEE a trade setup. Could SNOW break the mold for over-hyped IPOs and go higher with out a sharp move lower…of course! But that’s not how I approach the markets.
I stick with SRC Profits:
– Systematic
– Repeatable
– Consistent
If you invested in SNOW, I would love to hear about it in the comments.
I hope this was helpful!
Snow could double by year endFundamental Analysis: Off premises data base offer massive advantage as oppose to traditional cloud service, market is expanding, the fact that Warren Buffet is in should tell you something. Once SnowFlake could establish its market, potential earning is huge.
Technical Analysis: Firm support at $220 price range, price bounces back every time it approaches this range. Institutional ownership is huge, and they are offloading their shares. Once retail traders get in and volume starts picking up, price will be much higher
$SNOW is giving a GREAT IPO LONG opportunity todayIPO intraday trading strategy idea
Snowflake is a cloud software company.
The share price is rising and gonna continue this trend today.
The demand for shares of the company still looks higher than the supply.
These and other conditions can cause a rise in the share price today.
So I opened a long position from $278,31;
stop-loss — $199,31
information about take-profit will be later
Do not view this idea as a recommendation for trading or investing. It is published only to introduce my own vision.
Always do your own analysis before making deals. When you use any materials, do not rely on blind trust.
You should remember that isolated deals do not give systematic profit, so trade/invest using a developed strategy.
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Snow to 150?After doing my research i find that this stock is heavily overpriced comparing to many other cloud companies there is little opportunity for this company to be worth over 20 billion, current market cap 70 billion.
Evaluated at 12.4b in february of 2020 the current price seems highly unlikely to stay or even grow.
Snowflake (SNOW): Everything You Need to Know Before the IPOIf you like this analysis, please make sure to like the post!
I would also appreciate it if you could leave a comment below with some original insight.
Google (GOOGL), Amazon (AMZN), and Microsoft (MSFT) all have one thing in common: they are tech giants in the field of cloud services
In this analysis, I’ll be analyzing the fundamentals of Snowflake (SNOW), a startup that is about to challenge the Big 3 very soon.
About Snowflake
-Snowflake submitted their IPO documents to the SEC in August 24
- Snowflake is currently the fastest growing startup in the cloud industry
- The company consists of ex-developers from Oracle (ORCL)
- Founded in 2012, the company currently has about 1400 employees.
Company Valuation
- The company was valued at $12.4 billion in February 2020
- One thing to note from this company’s valuation is how it skyrocketed throughout time:
- In January of 2018, the company was valued at $1.5 billion
- By October 2018, the company’s valuation popped to a whopping $3.5 billion market cap
Investors
- Its main VC investors include: Sequoia Capital, Altimeter Capital, ICONIQ Capital, Capital One Growth Ventures, and Shutter Hill
- Venture Capitals have collectively invested $1.4 billion into the company so far.
- The fact that Warren Buffet is willing to bet big on this company’s IPO also acts as bullish stimulant, especially knowing that Buffet is famous for his dislike towards tech stocks.
Financials
- Snowflake shows stunning revenue growth
- Their 2020 Q2 revenue hit a staggering target of $133 million, demonstrating a 121% year on year growth
- Compared to their counterpart Datadog (DDOG), whose Q2 revenue showed a 68% yoy growth, it could be said that Snowflake’s revenue growth is massive
- While their financials are still at a net loss, their losses for the first half of the year was at $171.3 million, which is a $6 mil reduction compared to that of last year
Business Model
- Snowflake has been building a data warehouse since 2014
- They offered a virtual data lake between cloud suppliers and a company’s program/application
- This allows clients to easily approach massive amounts of data quickly
- With the shift from on-premise to cloud services, more and more companies enter the cloud service industry as clients
- Snowflake is also attempting to make a transition from a warehouse to a platform.
- This is because Snowflake is available for use in Amazon, Google, and Microsoft’s public cloud in 22 countries.
- Essentially, it acts as a platform that connects different cloud services, making the access and transfer of data from one cloud to another easy
- Through Snowflake’s platform, the operation of a data cloud is possible.
- This essentially means that the conventional on-premise, infra clouds, and app clouds can have access to, share, and extract data without any barriers
- As such, one of the greatest value their business model offers is the network effect through the interoperability of different cloud services
Conclusion
While the cloud service industry continues to be highly competitive among Amazon, Microsoft, and Google, Snowflake offers values that could easily enlarge the pie. Its solid business model offers potential to make net profits once they start cutting their massive marketing costs. Anyone who is bullish on the outlook for the cloud servicing industry should definitely have his eyes on this stock.
How I became Bearish on SNOW and FrogI been waiting for the Snowflake IPO and JFrog IPO for a while. Weeks ago, when hearing about how much the proposed price for Snowflake could be, I already became bearish. The same happened with JFrog. Then they increased, and seemingly increased even more in price. Those who invested super early into the IPO on the trading floor or accredited investors who even got pre-ipo shares are already seeming to be holding some pretty decent paychecks. The price also seems too high to attract many retail investors. This happens with some IPOs, and usually it is a putoff. That being said, invest at your own risk and do your own due diligence. Everything I say is on an opinion based basis, not meant to warrant actionable financial advice.
Snow seems bullishNote how the pink line hits all of the candles. This is clearly a powerful bullish signal. It's practically the new TSLA, so get in while you still can.
