Despite Berkshire Hathaway (NYSE:BRK-B) investing in Snowflake (NYSE:SNOW) when it became a publicly listed company, shares aren’t finding bidders these days. SNOW stock peaked at over $400 in November 2021. The Nasdaq Composite Index (NASDAQ:QQQ) peaked in that month, as well. Snowflake looks like a bargain at a fresh 52-week low. There is a catch for investors who are willing to catch the proverbial falling knife. Technology stocks are out of favor. Other than a brief relief rally, the downtrend shows no sign of slowing. Ignoring the impact of higher inflation and interest rates, Snowflake shared some promising developments.
On May 3, Snowflake announced that its Data Cloud users can add data from Dell’s (NYSE:DELL) on-premise object storage arrays. Customers do not need to worry about compliance and government regulations. Users may enjoy this easier access in the second half of the year. In March, Snowflake launched the Retail Data Cloud. This will end the data silos across the industry. Businesses will benefit from better identifying the best data and drawing insights. Although SNOW stock declines do not reflect it, the retail digital transformation continues. This is a massive shift in the industry. As it happens, Snowflake will realize a larger addressable market.
Unfortunately, Snowflake does not trade at a favorable discount. The key metrics, including its forward price-to-earnings ratio and price-to-sales ratio, flash a warning sign. Yet, this is a technology software firm that offers disruptive technology for traditionally slow industries. It is unlikely to ever trade at a big enough discount. If it does, technology investors should take advantage of the market weakness. The technology stock sell-off is going through a near-term phase. Eventually, investors will replace their sentiment of peak fear with indifference. After Snowflake posts new customer wins, sentiment will turn positive.
Snowflake will post quarterly results next month. Chances are increasing that the stock will drift lower. Investors will brace for the worst. The company will likely post strong revenue growth. It might lift its earnings forecast for the year if it signed more customer contract wins in the quarter.
On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.