5 Reasons Buffett Bet Big On Fast Growth Stock
Snowflake (SNOW), a data warehouse built for the cloud, is a fully managed software service that offers a pay-as-you-go pricing model. Snowflake’s architecture handles all types of data, including structured, semi-structured, and unstructured data.
With the world rapidly changing to online data, Snowflake has been able to adapt to this change and provide its services through the internet. Here are five statistics on why now is the best time to invest in Snowflake.
#1 – They Had the Biggest Software IPO Ever
In September 2020 — during the COVID pandemic and when the overall economy was struggling — Snowflake raised more than $3 billion in its initial public offering (IPO), the most ever for a software company. They were also heavily backed by Salesforce and Warren Buffet’s Berkshire Hathaway, which added to the confidence.
This outcome did not happen by fluke.
Snowflake generated over $500 million in annual revenue in the first half of 2020 and grew by over 130%. This, coupled with the economy’s downward spiral, meant that investors were chomping to be a part of this high-growth company. Since the IPO, SNOW stock has gone from the initial price of $120 to a high $405. It has since settled around the $180 level, showing potential for upside movement.
#2 – The Company Predicts $10 Billion in Revenue by 2028
Snowflake’s revenue has grown at a substantial rate. In Fiscal Year 2020, the company saw a 174% growth, followed by 124% in Fiscal 2021, and 106% in Fiscal 2022.
There are a few reasons why the growth rate has been slowing, mainly because the base number is getting larger. Secondly, the company is signing more enterprise customers with a longer sales cycle.
Even with a slowing growth rate, their revenue will still increase substantially over the next few years. In fact, Snowflake executives announced at a recent conference their plan to reach $10B in revenue by the end of 2028. This plan shows the company’s confidence in maintaining market dominance over that period.
#3 – Snowflake Served 241 of 500 Fortune 500 Companies at the End of Fiscal Year 2022
Of the 500 Fortune 500 companies, 241 used Snowflake’s services at the end of Fiscal Year 2022.
With big names like AT&T, Nike, and Coca-Cola using their services, it is hard to deny that they are one of the leading data warehouses on the market.
Snowflake estimates the company will have 1,400 customers that generate over $1 million in product revenue by 2029; having that many enterprise customers is an excellent sign for the company’s future.
#4 – They Hired Nearly 1,000 Employees in 2022
Snowflake’s hiring practices show rapid growth and commitment to being the top data warehouse.
The CFO of Snowflake announced in the company’s fiscal second-quarter earnings call that the company had hired nearly 1,000 employees in 2022 alone.
They almost doubled their workforce in 2022 and are on track to do the same in 2023. While most companies have paused or slowed hiring over the last couple of years, Snowflake has done the opposite. They are confident in their product and vision, which is a good sign for potential investors.
#5 – The Global Cloud Storage Market Is Predicted to Grow to $187.3 Billion by 2027
Snowflake will become increasingly essential for small businesses and enterprises as the world moves online. In addition, with many people working from home, there is an even more significant reliance on data to make decisions. This reliance has caused a considerable increase in demand for data warehouses, and Snowflake is one of the best-positioned companies to take advantage of this trend.
According to ReportLinker, the global cloud storage market is predicted to grow to a staggering $187.3 billion by 2027 — a statistic that may be on the low end of things.
With technology such as Artificial Intelligence (AI) and the Internet of Things (IoT), the amount of data being computed and stored is expected to grow exponentially. Snowflake constantly adapts to the changing landscape of the internet, and the company is poised for continued success.
When looking at companies’ valuations, investors should consider the overall market and where the company is positioned within that market. Snowflake’s unique product and commitment to being the best data warehouse make it a company worth watching.
Why Now Is the Time To Buy SNOW
Thanks to distinctive architecture and a pay-as-you-go model, Snowflake is set to revolutionize how data is stored and accessed. Its IPO was the biggest ever for a software company, leading Snowflake to quickly become one of the hottest tech companies on the market.
Investors are excited about Snowflake, and these five statistics are only a snapshot of the company’s accomplishments. With its commitment to growth and customer satisfaction, Snowflake is poised to take over the data warehouse market for years to come.
