Snowflake is a strong sell. Here is why

Snowflake Inc. (NYSE:SNOW) traded at $200.12 at the time of publishing this analysis. While part of the decline is attributed to the bearish trend on technology stocks, SNOW is significantly impacted by the losses reported in Q4. SNOW recorded a per-share loss of $0.46 compared to a $0.70 per share loss in the previous year.

Analysts comment that the results showing a narrower loss are a solid indication of improved performance. The market, however, does not consider the loss on a positive note. The rationale is that many businesses announced significant revenue and earnings growth this season. Investors, therefore, would spend less time analyzing security returning losses when other firms are announcing major growth in profitability and even increasing cash dividends.

SNOW on a free fall after testing $200 support

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Technical analysis indicates that SNOW crossed below $200. The level raises concern because the stock would still be considered overvalued when compared to other firms in the market that have a proven record of profitability and value creation. Considering that MA 10 slipped below MA 50 while MA 20 is on a downward trend for a certain convergence in the coming days, the stock is a strong sell. MACD and RSI are also bearish.

Summary

SNOW reported a loss in an earnings season with many firms that showed significant growth in revenues and earnings. The market discounts the risks that the company continues to face from the macro-economy and the global supply chain for computer chips. The stock will continue falling to find a new low that is now uncertain.

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