Snowflake Stock Forecast (08-06-21)

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Elliott Wave Stock Recommendation

 

Before we dive into our Snowflake Stock Forecast for this week.

 

Here’s a quick update on Snowflake for those who are not familiar with this fast rising tech star in the cloud computing space.

 

In a nutshell, Snowflake Inc. (NYSE : SNOW) is a cloud-based data platform.

 

It’s core platform offers Data Cloud Computing Services utilizing a “Infrastructure-As-A-Service” business model.

 

Essentially, Snowflake is an ecosystem that enables customers to consolidate data into a single source for broad based Data Analytics.

 

Technically speaking, this number crunching processes has many advantages and functionality.

 

These include data-driven applications, share data and determine meaningful business insights, etc.

 

 

Trivia

 

Here’s a little trivia before the fun stuff begins.

 

Bet you did not know that Snowflake Inc., was formerly known as Snowflake Computing, Inc. before it changed its name in April 2019.

 

FYI, Snowflake Inc. was incorporated in 2012.

 

And is currently headquartered in San Mateo, California in the United States.

 

 

 

Summary Of Fundamental Analysis 

 

Without the shadow of a doubt, Snowflake Inc. has disrupted the global data warehousing scene with its powerful platform made for multi-cloud capabilities.

 

Fundamental-wise, 4 major factors stood for me and made Snowflake our Elliott Wave Trade Recommendation for this week.

 

Data Courtesy Of Morningstar

 

 

(1) Huge Potential Untapped International Market With Loyal Existing Customer Base :

 

Snowflake’s customer base is quite far reaching and extensive.

 

With diverse customers both in the the United States as well as international clients.

 

It’s platform is used by multitude of organizations of varying sizes in a wide range of different industries.

 

Massive customer retention figures of 168% clearly indicates that its core customers, mostly in the US find true value in the platform.

 

And with a strong customer base, it naturally points to strong growth for the foreseeable future.

 

In addition, Snowflake has barely ventured and tapped into the larger addressable international markets.

 

Although their cloud computing business in Europe, Middle East, Africa and Asia-Pacific has grown consistently with increasing revenue quarter on quarter.

 

This is still just the “Tip Of The Iceberg”.

 

And with a large runway ahead , it has plenty of opportunities to expand its international market share in the years to come.

 

 

(2) Unique Pricing Structure :

 

The magic of Snowflake’s business model is the way its customers are billed.

 

Being an “Infrastructure-as-a-Service” business model, it charges it customers for usage on a “Metered” basis.

 

Thus, as its customers grow, they will automatically spend more on Snowflake’s services.

 

And this will ultimately increase its Top Line revenues.

 

 

(3) Strong Quarterly Earnings :

 

During the most recent quarter, Snowflake grew its revenues by a whopping 110% year on year.

 

The company’s top line was buoyed by its customer count, which continued to show strength, increasing 68% year on year.

 

In addition, its remaining performance obligations grew 206% year on year.

 

Clearly indicating that Snowflake has a huge backlog of business ahead of it going forward.

 

 

(4) Established Management :

 

Talk about having a strong leader at its helm.

 

Perhaps you can find no CEO more qualified in this industry other than Dutch-born Frank Slootman.

 

Snowflake’s CEO Frank Slootman is not the typical entrepreneurial genius that can built a company from the ground up.

 

But one with a track record for turning the ideas of other budding entrepreneurs into massive IPO jackpots.

 

In his two decades experience in the data computing space.

 

Slootman was at the helm of data-storage firm Data Domain from 2003 until its takeover by EMC Corp.

 

Then he ran cloud service firm ServiceNow Inc. from 2011 to 2017.

 

Under his leadership, ServiceNow became a publicly-traded company as he led the company through a $210 million IPO in June 2012.

 

Snowflake is now the third CEO gig with another massive IPO for Slootman.

 

In my book, Frank Slootman does seem to have the “Midas” touch.

 

 

 

Summary Of Technical Analysis

 

 

Since its massive run up during the tail end of last year (Dec 2020), the share price of Snowflake has taken a massive hit.

 

Like all high flying tech stocks, it is heavily bashed down despite fundamentally strong numbers.

 

Taking a look at the charts, our Snowflake stock forecast seems to indicate that an W-X-Y corrective structure in gray might have completed.

 

The initial W-leg in gray unfolded internally as a (a)-(b)-(c) Zig Zag corrective structure dropping down to the Fibo 38.2% level.

 

Subsequently, the middle X-leg in gray resulted in an (a)-(b)-(c) Regular Flat corrective structure.

 

While the last Y-leg in gray turned out to be another (a)-(b)-(c) Zig Zag corrective structure dropping down to the Fibo 88.6% level.

 

Technically, this has all the characteristics of a Harmonic Bat Pattern albeit 2 significant factors.

 

Firstly, the Snowflake chart has only a limited amount of data available since it only IPO last year. 

 

And secondly, the current price drop has gone beyond its initial IPO price levels.

 

 

Our Outlook

 

Despite that, we are cautiously optimistic that our Snowflake stock forecast has taken a turn for the upside.

 

And might be in the midst of a potential Wave 1 in White.

 

Currently, the price of Snowflake is in the midst of a minor consolidation after a small rally, hovering around the Fibo 50% level although technically the 50% is not a Fibo level.

 

From a Gann fan perspective, this current price consolidation comes as no surprise as the consolidated prices are right smack at the 2/1 factor line.

 

A convincing break above this diagonal line will indicate further upside, at least to the next potential Gann levels.

 

For now, our Snowflake stock forecast is for prices to consolidate within the Fibo 38.2% and Fibo 61.8% range as highlighted by the yellow box.

 

 

Unorthodox Perspective

 

And if you factor in the Time Technical factors, the period from 29th May to 22nd June is one of the Mercury Retrograde periods of 2021.

 

For those who are not familiar with  Mercury Retrogrades.

 

These periods are often characterized by communication discords and imbalances.

 

They are also said to have some effects on our health, mind and body, not to mention the overall financial markets.

 

 

Trade Safe and never risk more than 1% to 2% of your account equity on any trades.

 

For more potential trade setup suggestions on the US Stock Markets, check our Blog Posts On US Stocks.

 

Shorten your learning curve by downloading our complimentary Elliott Wave Cheat Sheets.

 

For more articles on the Elliott Wave Principle, check out our other posts in our  Elliott Wave Blog.

 

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