Is Snowflake (SNOW) a worthy equity investment?

RiverPark Fund, an investment management firm, has published its third quarter 2021 letter to investors “RiverPark Large Growth Fund” – a copy of which can be found downloaded here. The RiverPark Large Growth Fund (the “Fund”) posted a return of -3.23% for the third quarter of 2021, while its benchmarks, the S&P 500 Total Return Index (“S&P”) returned. At 0.58%, the Russell 1000 Growth Total Return Index (“RLG”) returned 1.16%, while the Morningstar Large Growth category returned -0.07%. You can check out the top 5 holdings in the fund to get a feel for their top picks for 2021.

RiverPark Large Growth Fund, in its letter to investors for the third quarter of 2021, mentioned Snowflake Inc. (NYSE: SNOW) and discussed his position on the company. Snowflake Inc. is a cloud-based data warehousing company based in Bozeman, MT with a market cap of $ 109.7 billion. SNOW has achieved a 29.63% year-to-date return, while its 12-month returns are up 11.95%. The stock closed at $ 364.78 per share on November 29, 2021.

Here’s what RiverPark Large Growth Fund has to say about Snowflake Inc. in its Q3 2021 letter to investors:

“After the scorching second quarter results, Snowflake, a position we initiated in March, has also been a major contributor to 3T. The company saw product revenue growth of 103% year-over-year, net revenue retention of 169% and non-GAAP gross margin of 74%, up 700 basis points from ‘year after year. Management has also raised its forecast to 92% product sales growth for the full year.

Snowflake offers cloud-based data storage and analysis, commonly referred to as a “data warehouse as a service”. The data warehousing market, created by the massive and growing amount of user, customer, and account data and the need to research and analyze it, has historically stored its data on physical servers located on site. Incremental warehouse data capacity and renewals are expected to be stored offsite on cloud servers, with over 75% of databases expected to migrate to the cloud by 2022, resulting in a market close of $ 100 billion.

Snowflake provides complex data management and analysis tools to its customers, eliminates the need for users to manage infrastructure, is fully scalable for each customer, and can be run on any Amazon cloud platform, Microsoft or Google. The company also has a single, customer-aligned, usage-based billing model. With the company’s capital spending model (Snowflake uses the public cloud for hosting), we expect FCF to grow much faster than revenue growth, which we expect to comfortably grow by over 50% per year over the next few years. Additionally, we have great confidence in the leadership team at SNOW, which had previously enjoyed tremendous success in guiding one of our other major cloud software portfolios, ServiceNow. “

Based on our calculations, Snowflake Inc. (NYSE: SNOW) was unable to secure a spot on our list of 30 most popular stocks among hedge funds. SNOW was in 73 hedge fund portfolios at the end of the third quarter of 2021, up from 70 funds in the previous quarter. Snowflake Inc. (NYSE: SNOW) has generated a return of 22.47% in the past 3 months.

Disclosure: none. This article was originally published on Monkey initiate.


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