Snowflake (SNOW) shares experienced a significant decline of 18% on Thursday following several pivotal announcements from the cloud software company. This downturn was spurred by a combination of factors, including the retirement of CEO Frank Slootman, the unveiling of Sridhar Ramaswamy as his successor, and the release of fourth-quarter earnings results alongside a weaker-than-anticipated first-quarter outlook.
The company reported that Slootman, a billionaire, will step down from his role as CEO but will continue to serve as chairman of the board. Sridhar Ramaswamy, former Google ad chief, will assume the CEO position. Snowflake’s first-quarter product revenue projection, falling between $745 million and $750 million, fell short of analysts’ expectations of $759 million, as reported by StreetAccount. Additionally, the adjusted operation margin forecasted for the first quarter, at 3%, was below the 7.2% anticipated by analysts.
Morgan Stanley analysts reacted to Snowflake’s fourth-quarter results by downgrading their rating of the company’s stock from overweight to equal weight. They also revised their price target downward to $175 from $230, expressing concerns about competitive pressures and the company’s positioning for Generative AI. Conversely, analysts at Macquarie Equity Research upgraded Snowflake’s stock to outperform and raised their target price to $205, citing confidence in the company’s strong product and sales organization, as well as their positive outlook on Ramaswamy’s leadership.
Ramaswamy, who spent 15 years at Google and co-founded Neeva in 2019, brings substantial industry experience to his new role. Snowflake’s acquisition of Neeva for $185 million last year further underscores the significance of Ramaswamy’s leadership transition. The departure of Frank Slootman follows a period of tenure marked by the sudden ousting of former Microsoft executive Bob Muglia in April 2019.
— CNBC’s Michael Bloom and Jonathan Vanian contributed to this report.
