US Markets
Thursday, February 29th, 2024 6:55 pm EDT
Key Points
- Leadership Change and Financial Impact:
- Snowflake experienced a significant drop in shares following the announcement of CEO Frank Slootman’s retirement and the appointment of Sridhar Ramaswamy as his successor.
- The company’s fourth-quarter earnings fell below expectations, contributing to investor concerns, with projected first-quarter revenue and adjusted operating margin also disappointing analysts.
- Analyst Reactions and Stock Performance:
- Morgan Stanley analysts downgraded Snowflake’s stock rating and lowered their price target, citing potential competitive concerns stemming from the fourth-quarter results and CEO transition.
- Conversely, analysts at Macquarie Equity Research viewed Slootman’s departure as an opportunity for positive change, upgrading Snowflake’s stock rating and raising their target price.
- New CEO and Company Background:
- Sridhar Ramaswamy, formerly of Google and Neeva, has been appointed as Snowflake’s new CEO.
- The transition follows the tenure of previous CEO Bob Muglia and underscores Snowflake’s efforts to navigate leadership changes amidst its growth trajectory and competitive landscape.
Shares of Snowflake plummeted by 20% in morning trading following the announcement of CEO Frank Slootman’s retirement and the appointment of Sridhar Ramaswamy, Google’s former ad chief, as his successor. Slootman will retain his position as chairman of the board. The drop in shares was compounded by the company’s fourth-quarter earnings report, which fell below expectations, along with a weaker-than-anticipated outlook for the first quarter. Snowflake projected first-quarter product revenue to range between $745 million and $750 million, missing analysts’ estimates of $759 million, and forecasted an adjusted operating margin of 3%, lower than the anticipated 7.2%.
Morgan Stanley analysts downgraded Snowflake’s stock rating from overweight to equal weight and slashed their price target from $230 to $175. They expressed concerns about competitive pressures, citing potential issues stemming from the fourth-quarter results and Slootman’s departure. Macquarie Equity Research, on the other hand, viewed Slootman’s exit as an opportunity for positive change, upgrading Snowflake’s stock to outperform and raising their target price from $182 to $205. They highlighted confidence in the company’s product and sales organization to counterbalance uncertainties surrounding the executive suite.
Ramaswamy, who spent 15 years at Google before co-founding the consumer search engine Neeva in 2019, has been appointed as Snowflake’s new CEO. Neeva, aimed at challenging Google, was later acquired by Snowflake for $185 million after discontinuing its operations. The leadership transition at Snowflake follows the tenure of former CEO Bob Muglia, a former Microsoft executive, whose abrupt departure occurred in April 2019.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/02/29/snowflake-shares-drop-19percent-on-ceos-retirement-weak-guidance.html
