Ticker: SNOW
Description of why you are requesting DD: because I don’t know shit about cloud computing but would like to learn. So just getting the DD started.
@Nezdog brought up this ticker yesterday as a sympathy play to all the large caps that killed it - mainly due to cloud computing revenue: IBM; MSFT; AMZN
I’ve read a little about SNOW but would really like to hear from someone that has experience/expertise in this field. ER are a month away. Just looking at the chart, it WAS down 39% since it’s peak with the selloff in tech however it’s recovered as most tech stocks have. As I’m writing this the stock is up 4% on the day.
SNOW! I wrote up some information about them last earnings. Overall they did pretty good, and continue to target large fortune 500 companies. They took a beating like many of the other tech stocks the last few months, but overall their growth has been great. Main issue is they have lower volume and higher spreads for their options. I’ll be looking out for more information on them.
this DD was great and wish i had read back in December. also @nezdog is dropping some knowledge bombs. really feel like i’m learning a lot even though i have to google some of the terminology. going to look at some March calls ATM but this is literally thousands for one call. hopefully the CPI data will make the markets a bit jerky in the morning. then i will be looking to ride IV into ER. thanks, fellas, for all the great work
I know less about the technical elements of snowflake as a company, but overall this earnings season is showing that there are huge tailwinds for most SaaS companies involved in the “digital transformation” of the economy.
NOW, MSFT, TEAM, TWLO - all absolutely crushing it
Also their CEO Frank Slootman is a legend, like a true S tier exec
Bear case: any macro risks to the economy, so watch CPI data. And options are super expensive unfortunately
I’ll be looking for entries to play IV run up. Depending on how well those do, will look to take small lottos for actual earnings
today’s pullback in tech with CPI coming out over estimates might be the best opportunity to buy leading up to ER on 03/02. Not the best at technicals but it seems like SNOW has double-bottomed. also, before CPI in PM the share price broke over that 310-310.50 support. now it looks like it’s fallen down to the 300ish support level and falling below that it looks like the 294.50-295 range.
its fine to watch Datadog but its not a direct competitor to SNOW so I have to correct myself here. Datadog does monitoring which is different from SNOW.
SNOW is up another 4% today on a down market for Tech and market in general.
I don’t know how to merge my DD on SNOW I posted in the earnings forum so I have attached the link below so others looking at this company have more info to think about:
Just now seeing this thread. I’m well versed in this space but here is a TL;DR
SNOW’s aim is to reduce the complexity that comes with a very mature cloud deployment. Imagine you want to reduce provider risk so you deploy your applications into AWS and GCP.
That would require 2 operational models. SNOW abstracts that away( or tries to) - which is worth a lot.
Overall, their value prop is interesting but exceptionally difficult to deliver on, I’ve always been skeptical but they do have good sentiment overall
My background: I sell software to the same types of companies SNOW does
thanks, Not_Forrest! appreciate the insight as always. For someone with experience/expertise in the industry really appreciate grounded skepticism.
my general understanding from all the thorough DD on the threads seems like the fundamentals are sound but expectations are very high. i like that it’s a pay-per-use model and that most clients sign up for more years for more money. whether they truly deliver what they promise, as Not_Forrest noted, is debatable.
Sentiment Play for Me
sentiment on the company and industry is what i’m gonna base this trade on. a lot more difficult today with CPI numbers being high and remarks of earlier than expected hikes. makes the direction from the Fed less clear, as up until today, it looked like they were committed to March. and the markets even had considered the possibility of 50 basis points.
up until the late afternoon, SNOW sentiment was strong enough to not correlate with SPY’s momentum but at the end it wasn’t enough. still, SNOW ended positive on the day which tells me just how strong the sentiment is.
Trading Strategy
i bought in near close for 3/18 315c. not a YOLO play but pretty significant for my account. it’s OTM now but was ATM when i bought (boo).
i’m going to ride sentiment now that the CPI data is out, but any remarks prior to March, and subsequent downward pressure on SPY, could kill sentiment/momentum.
not expecting any rug pulls like PTON or AFRM but who knows? this past week was some wonky stuff from markets. definitely looking for an exit earlier than week of OPEX. maybe even a week prior, just to be safe.
CPI wasn’t favourable and made this play much riskier but the strength of the sector overall, and no bad news from SNOW, made me go in on the trade.
Cloudfare ER Update
as i’m writing this, NET just released their ER and announced they’re acquiring a company called Vectrix. initial algo response seems positive. revenue beat and EPS came in expected at $0.00/share. will be watching how NET responds in the morning and if it gaps up/down.
I would. There is a direct correlation with AWS, GCP and Azure, particularly AWS. We saw good numbers on the cloud from AMZN, GOOG and MSFT. They should be direct beneficeries.
Yes that they are correlated. Whenever a saas is offered on aws its huge. Its like a drink being offered on walmart. Ive worked on snowflake before in aws and it is an enterprise level solution.
Conq’s lessons on trading were ringing through my head last night:
Priority of Market Influence: News > Fundamentals > Technical Analysis.
with the news of Monday’s Fed meeting, i’m going to be watching now SNOW reacts to SPY. the lost momentum and divergence last night hopefully has dissipated but many people might be taking profits before the weekend and sitting cash until the meeting is concluded and remarks are made. posted this link to TF but to increase rates too quickly is not just a negative factor to the economy as a whole but there is a lot of political pressure for the Fed to look like they’re supporting economic growth (upcoming midterm elections). This would trump the sound fundamentals and decent technicals we’ve been seeing on the daily candles up until yesterday.
Trading is being a Sniper
using this analogy helped me a lot in my approach to trading. not that i have any military experience. with the Fed meeting, my clear shot now looks more like i’m trying to hit the target in a crowd. do i wait for the crowd to thin out? or do i regroup and try to find a better angle? selling for a small loss and then waiting till after Monday’s meeting is a possibility. or do i just stay put and see if the market shakes off the news? theta decay is not so much a concern as my position is for March expiry. better re-entry is my main priority as the conviction on the thesis is still there.
Fantastic analysis. The stock seems to be extremely SPY correlated at the moment. Although this play certainly looks to be a watch heading into next week.
thank you, Conq (and Brummel too)! been learning and gaining so much from you and the community. really appreciate the response.
admittedly, i actually got lucky selling in the morning as i made a little over $100 profit. definitely did not see the winds of war coming on so strong with Ukraine. praying for everyone who’s serving and has loved ones that serve. sitting and watching Conq trade in the mornings just might be something i do in the near future.
just to add to Conq’s “Sniper Trading” analogy, i think SPY and market forces aren’t really like crowded marketplaces. it’s more like calculating for wind. i can adjust for the wind to a certain degree and still hit my target. but when the wind started to pick up i had to call it off. been a wild week and might just decompress this weekend. hope everyone’s okay.
looking at the 03/18 chain, the 295c had a ton of volume today, almost equivalent to the OI. these strikes are now the price of what i had paid for my 330c so very tempting to reposition. IV is at 74%.
still waiting for the winds to die down:
FOMC tomorrow. SNOW doesn’t seem to have the algo-tard strength that other tickers do in that it is slower to react to news. hopefully JPow says “inflation” a 100 times during his call and it will bring the price down further.
Ukraine/Russia. tomorrow is a supposed day of attack. i’m not a military or political expert but it nothing happens tomorrow, the shot at SNOW becomes a little bit clearer. but the end of the day run up saw SNOW close just under 300 which indicates to me that there is still momentum in this stock.
Price Cut. definitely not something i wanted to see as news on the stock has been bullish since Jan. it’s an over 10% price reduction. but still 33% higher than what it trades at now. would like to see an offsetting PT news article in the next few days.
Spoke with my friends in the industry and we anticipate SNOW to have good earnings reports.
I don’t plan to take positions until closer to earnings since SPY will likely bring the whole market down so any early positions in calls might get smoked.
Ill update in this thread when I take my position for anyone that cares
