Shares of cloud data platform Snowflake (SNOW) gained in today’s trading session despite getting downgraded from Overweight to Equal Weight by Wells Fargo, which also slashed its price target from $200 to $130. The firm’s issues seem to be piling up, and Wells Fargo analysts, led by Michael Turrin, noted that the narrative around Snowflake has shifted significantly since they first rated it in January 2023.
Concerns include new management, increased competition from Databricks and hyperscalers, questions about the company’s tech moat, and potential customer churn due to a recent data breach that affected major clients like AT&T (T), TicketMaster (LYV), and LendingTree (TREE).
Additionally, some customers impacted by the breach are reportedly considering leaving Snowflake for other big data providers like Amazon (AMZN), Microsoft (MSFT), and Databricks. This, combined with the news that Warren Buffet’s Berkshire Hathaway has exited its stake in Snowflake, has made Wells Fargo more cautious about the company’s near-term prospects.
Website Traffic Suggests Potential Headwinds
When taking a quick look at SNOW’s website traffic, the trends seem to suggest that the company could be facing potential headwinds. As the image below shows, the number of visitors essentially stayed flat during the most recent quarter when compared to the same time last year. In addition, total estimated visits fell almost 3% on a year-to-date basis when compared to last year. This could potentially be evidence that clients or potential customers are looking to other big data providers.
Is SNOW Stock Worth Buying?
Turning to Wall Street, analysts have a Strong Buy consensus rating on SNOW stock based on 25 Buys, eight Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. After a 14% decline in its share price over the past year, the average SNOW price target of $200.97 per share implies 57% upside potential.
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