Snowflake's financial report exceeds expectations, yet the stock price continues to plummet. Will the aftermath of "Buffett's clearance" persist?

Data cloud analytics company Snowflake has raised its full-year product revenue forecast, but the stock price continues to plummet. Analysts believe this is related to Buffett's liquidation of Snowflake.

On Wednesday, Snowflake raised its full-year product revenue forecast, expecting product revenue for the 2025 fiscal year to be $3.36 billion, higher than the previous forecast of $3.3 billion. Snowflake stated that this was due to the integration of artificial intelligence helping companies simplify data faster and more efficiently, leading to increased demand for Snowflake's data cloud platform this year.

However, Snowflake's stock price dropped by 8% after hours.

D.A. Davidson analyst Gil Luria attributed this decline to the company not combining the upward revision of revenue expectations with an upward revision of profit margin expectations. However, economist Leo Sun pointed out that Buffett's Berkshire Hathaway sold all of its Snowflake shares in the second quarter of 2024, eliminating one of the strongest reasons for investors to hold onto Snowflake.

In addition, Snowflake also faces data security issues and intense competitive pressure, posing many risks to its future development.

Snowflake Faces Many Development Risks

Snowflake went public on September 16, 2020, at a price of $120 per share, more than doubling in initial trading to $24, and reaching a historical high of $401.89 on November 16, 2021. At that time, investments from Buffett's Berkshire Hathaway and Salesforce in its IPO, as well as the market's frenzy for growth stocks, amplified its stock price surge and led many investors to overlook its soaring valuation.

However, currently, Snowflake's stock price is around $127, almost back to the IPO price.

Snowflake's product revenue accounts for the majority of its total revenue, growing by 106% in the 2022 fiscal year, 70% in the 2023 fiscal year, but only 38% in the 2024 fiscal year. The Snowflake management expects this slowdown to continue, with a projected growth of only 24% in the 2025 fiscal year.

Snowflake attributes this slowdown mainly to macroeconomic headwinds, but its continued losses and the sudden retirement of CEO Frank Slootman earlier this year have hindered the bullish sentiment.

From 2021 to 2022, Salesforce gradually sold all of its Snowflake shares, but during this period, Buffett held onto the 6.13 million shares he purchased in the Snowflake IPO, although these shares only account for about 0.2% of Berkshire's vast investment portfolio However, the bulls believe that Buffett's confidence in the company indicates that Snowflake is still a company worth long-term investment.

Nevertheless, in the second quarter of 2024, Berkshire Hathaway liquidated all its shares in Snowflake, causing investor confidence in Snowflake to decline, according to Leo Sun.

Furthermore, in May of this year, Snowflake experienced a data breach incident where a large amount of customer data was stolen, affecting companies such as Ticketmaster's parent company Live Nation and telecom giant AT&T. As of the end of the first quarter of the 2025 fiscal year, Snowflake had already served 709 of the Global Fortune 2000 companies, so many other major clients may have been affected.

If this crisis deepens, Snowflake may face difficulties in attracting new customers. Snowflake's other major competitors, especially Amazon Redshift, Microsoft Fabric, and Databricks, may take advantage of this chaotic situation to snatch some of Snowflake's existing customers