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Shares in cloud data-warehouse software company Snowflake (SNOW) dropped 8% in extended trading on Wednesday after a widening net loss and rising costs overshadowed quarterly results that came in ahead of expectations. Moreover, despite the firm raising its annual revenue outlook, it left its gross margin forecast unchanged, also possibly contributing to after-hours weakness.
The Bozeman, Montana-based company’s stock, which has tumbled around 43% from its 2024 high through Wednesday’s close, remains out of favor with investors after naming a new CEO in February and disclosing a cyberattack in late May in which data of several high-profile clients, including telecom giant AT&T (T) and TicketMaster-parent Live Nation (LYV), was compromised.
Below, we take a closer look at Snowflake’s chart and use technical analysis to identify important price levels to watch out for amid the stock’s projected post-earnings sell-off.
Since topping out in early February, Snowflake shares formed a falling wedge, a chart pattern that signals a potential upward price movement.
Indeed, the stock broke out from the wedge earlier this month following a rally from its lower trendline, with volume inching higher ahead of the company’s quarterly results, indicating investors were positioning for a post-earnings move. However, that move looks to be lower, as shares fell 8% to $124.23 in after-hours trading.
Amid a post-earnings fall, investors should monitor three lower chart levels where Snowflake shares could attract buying interest.
The first sits around $123, an area where the shares may encounter support near the June swing low, which also corresponds with a range of recent prices situated close to the falling wedge pattern’s top trendline.
A failure to hold this level could see the shares slide to the $108 region, where they may attract buying interest near the wedge pattern’s low, which also marks the stock’s 52-week low.
Finally, if the stock makes a similar downward trending move to its most recent leg lower from early July to early August, the price could fall to the wedge’s lower trendline around $95. We project this by taking the bars pattern from the down trending move and positioning it from Wednesday’s high.
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Meeting minutes released Wednesday bolstered confidence that an interest rate cut is likely in September, but it’s still unclear how many members of the Federal Reserve will support the decision.
According to the minutes of the central bank's policy meeting on July 30-31, most of the Federal Open Market Committee (FOMC) members supported lowering interest rates from their decades-high levels. But maybe not all of them, as the minutes showed some disagreement on when it would be appropriate to act.
“The vast majority observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting,” the minutes said.
The statement implied that at least one or more members were still unsure about an interest rate cut, as other sections noted when opinions were unanimous.
Investors and economists forecast that after a year of holding the influential fed funds rate at 5.25% to 5.5%, the Fed will cut rates for the first time in more than four years at its September meeting.
The July meeting minutes not only showed more Fed officials coalescing behind the idea of a rate cut but also that some believed that the central bank should have begun cutting rates at the July meeting. While all of the officials at the meeting supported the decision to leave rates unchanged, the minutes noted that “several” officials were willing to vote for a rate cut at the meeting.
Since the minutes reflect economic conditions at the end of July, central bankers didn't have all of the economic data released since, such as the July jobs report that pointed to weakness in the labor market, wrote Bret Kenwell, U.S. investment analyst at eToro.
Fed officials have said they are shifting their attention from fighting inflation to preventing unemployment and weakness in the labor market would make them more likely to cut rates.
Investors will closely monitor Federal Reserve Chair Jerome Powell's upcoming remarks. On Friday, he is expected to give more details about the Fed’s policy timeline at the Jackson Hole Economic Symposium.
"A rate cut on Sept. 18 was being teed up at the end of last month," wrote BMO Economist Michael Gregory. "Market attention now turns to Powell’s Friday speech at Jackson Hole for further corroboration."
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Snowflake Reports Widening Losses, Sending Its Stock Lower
Snowflake's (SNOW) second-quar...
Investopedia
2 hrs
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Snowflake's (SNOW) second-quarter revenue grew from the year-ago period and beat analysts' projections, but losses widened as costs rose.
The data cloud company reported second-quarter revenue of $868.82 million, a 30% jump from the year-ago period, and above analysts' estimates compiled by Visible Alpha. However, Snowflake's net loss of $317.77 million or 95 cents per share widened from the year prior and represented a more significant loss than analysts projected. Excluding one-time items, adjusted earnings of 18 cents per share beat expectations.
The company said it expects fiscal third-quarter revenue to be between $850 million and $855 million and raised its full-year outlook to $3.36 billion, though both missed analysts' expectations.
"The quarter was hallmarked by innovation and product delivery, and great traction in the early stages of our new AI products," Snowflake CEO Sridhar Ramaswamy said in a release, adding that "with the combination of our platform, the network effect of collaboration and our AI innovations, we have a huge opportunity ahead to deliver even greater value to our customers."
Shares of Snowflake were down about 7% at $125.70 in extended trading Wednesday following the company's earnings report.
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As anticipation of Nvidia's (NVDA) upcoming earnings report builds, Raymond James analysts said they expect a solid quarter on demand for its artificial intelligence (AI) chips.
"We are looking for another strong quarter from NVDA despite the noise surrounding Blackwell delays," the analysts said, reiterating a "strong buy" rating for the stock.
Reported delays in the Blackwell chip sent Nvidia's stock price tumbling earlier this month, though the chipmaker has said production is on track to ramp in the second half of the year, as planned. Investors are likely to be watching for indicators of the delay's impact in the upcoming earnings report due for release on Aug. 28.
The analysts said they anticipate a "modest" contribution from Blackwell in the fiscal third quarter and that delays could drive sales of Hopper, the Blackwell chip's predecessor, in the near term.
They suggest that "a longer delay could increase the risk of a customer spending pause," but added that they "have no reason to doubt" Nvidia's capability to ship Blackwell by the end of the year.
Raymond James analysts were not alone, as other analysts have indicated worries about the impact of delays may be overblown.
The analysts said their checks with hyperscale customers and supply chain partners suggest no slowdown in demand as big tech companies ramp up spending on AI infrastructure, supporting Nvidia's data center sales.
The analysts highlighted that Nvidia beat revenue and outlook expectations in its past four earnings reports. While Nvidia has historically outperformed analysts' projections, the market's expectations around the AI darlings' performance have grown, setting an increasingly higher bar for the chipmaker.
Nvidia shares closed about 1% higher at $128.50 Wednesday. The stock has more than doubled in value since the start of the year.
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Ford Motor Company (F) is reworking its electric vehicle (EV) plans amid tough competition from local and foreign rivals and price pressures.
The automaker said on Wednesday it was nixing plans to develop an all-electric three-row SUV. Its next SUVs will instead be hybrids. Ford said it would take a $400 million non-cash charge to write down certain model-specific manufacturing assets. It warned the decision could also result in additional expenses of up to $1.5 billion.
The company also delayed the rollout of its next-generation electric truck, dubbed "Project T3," to the second half of 2027. The truck will succeed the F-150, which, according to Ford, is America's best-selling electric truck.
In its place, the company will launch a new electric commercial van, which it expects to power with battery cells produced at its BlueOval City plant in Tennessee starting in 2025.
The company highlighted intense competition from Chinese rivals, a glut of new EV models hitting the market in the next year, and increasing compliance requirements as reasons for the company's reappraisal of its roadmap.
“We’re committed to creating long-term value by building a competitive and profitable business,” Chief Financial Officer John Lawler said. “With pricing and margin compression, we’ve made the decision to adjust our product and technology roadmap and industrial footprint to meet our goal of reaching positive EBIT within the first 12 months of launch for all new models.”
Ford's foray into EVs has been expensive. Its EV unit, Model e, reported a loss of nearly $2.5 billion in the first half of 2024.
High costs and sluggish demand have led the carmaker to repeatedly adjust its EV plans. In October 2023, the company said it would delay $12 billion in EV manufacturing investments in response to softer-than-expected consumer demand.
Ford shares gained 1.6% on Wednesday.
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