Key Takeaways:
Snowflake shares plunged over 20% in after-hours trading after announcing a new CEO and issuing revenue guidance below Wall Street’s expectations.- Former Google executive Sridhar Ramaswamy was appointed as Snowflake’s new CEO, succeeding Frank Slootman.
- Despite reporting a 33% increase in fourth-quarter product revenue to $738.1 million and a narrowed net loss, Snowflake’s forecast of 22% growth in product revenue for the current fiscal year fell short of analyst estimates.
- Analysts had anticipated stronger growth prospects for Snowflake, leading to disappointment when the company’s revenue guidance didn’t meet expectations.
- The disparity between Snowflake’s revenue forecast and analyst projections contributed to the sharp decline in its stock price during after-hours trading.
Snowflake shares experienced a significant drop of more than 20% in after-hours trading following the announcement of a new chief executive officer and revenue guidance that failed to meet Wall Street’s expectations. The market reaction reflected investors’ concerns about the company’s future performance.
The cloud data company named Sridhar Ramaswamy, a former Google executive, as its new CEO, replacing Frank Slootman. While leadership changes are common in the corporate world, this transition coincided with Snowflake’s release of its financial forecasts, adding to the uncertainty surrounding the company’s direction.
Despite reporting positive financial results for its fiscal 2024 fourth quarter, including a 33% increase in product revenue to $738.1 million and a reduction in net losses, Snowflake’s outlook for the current fiscal year fell short of analyst expectations. This discrepancy between the company’s performance and market projections contributed to the negative sentiment among investors.
Analysts had anticipated stronger growth prospects for Snowflake, especially given its position in the competitive cloud computing market. However, the company’s forecast of 22% growth in product revenue for the fiscal year disappointed analysts and investors alike, leading to a sell-off in the stock.
The sharp decline in Snowflake’s share price during after-hours trading underscored the market’s reaction to the divergence between the company’s revenue guidance and analyst estimates. Investors reacted swiftly to adjust their positions, reflecting concerns about Snowflake’s ability to meet future revenue targets and sustain its growth momentum.
The appointment of a new CEO, coupled with the subdued revenue forecast, raised questions about Snowflake’s strategic direction and leadership stability. Investors will closely monitor how the company navigates these challenges and executes its growth strategy under the leadership of Sridhar Ramaswamy.
Snowflake (SNOW) shares experienced a significant drop of more than 20% during after-hours trading on Wednesday. The decline followed the announcement that Sridhar Ramaswamy would assume the role of chief executive officer (CEO), replacing Frank Slootman. Additionally, the company issued earnings guidance that fell short of Wall Street’s expectations, contributing to the negative market sentiment.
Ramaswamy’s appointment as CEO comes after serving as the senior vice president of AI at Snowflake since 2023. He joined the company following Snowflake’s acquisition of Neeva, an AI-powered search engine that Ramaswamy co-founded. Prior to his tenure at Snowflake, Ramaswamy spent 15 years leading advertising products at Alphabet’s (GOOGL) Google.
Frank Slootman, the outgoing CEO, announced his retirement from the position but will continue to serve as chairman of the board at Snowflake. In a statement, Slootman expressed confidence in Ramaswamy’s ability to lead Snowflake through its next phase of growth, particularly in the areas of AI and machine learning.
In the earnings press release, Frank Slootman, the outgoing CEO of Snowflake, emphasized the company’s success in engaging with the largest enterprises globally. He highlighted Snowflake’s Data Cloud platform as increasingly central to the AI and data strategies of numerous companies and institutions. Despite this positive outlook, Snowflake shares experienced a significant decline, dropping by 21% to $181.00 around 5:45 p.m. ET.