Snowflake stock is falling due to a combination of factors including:
- Decelerating revenue growth: Snowflake's product revenue growth has slowed down, for example, from 34% in Q1 2025 to around 30% in Q2 2025, which analysts say may not excite investors despite solid results. The slowing growth rate raises concerns about the company's momentum.
- Valuation multiple compression: The stock's valuation multiples such as Price-to-Sales and Enterprise Value-to-Revenue ratios have roughly halved, reflecting both company-specific challenges and broader market conditions impacting high-growth tech stocks.
- Macroeconomic headwinds: Rising interest rates have reduced the valuations for growth companies like Snowflake due to discounted future earnings expectations. Trade tensions and concerns about stagflation have also contributed to market anxiety and downward pressure on the stock.
- Competition and market share erosion: Increased competition in the cloud data warehousing space from large cloud providers and other players has put pressure on Snowflake’s growth outlook.
- Profit-taking and market volatility: Recent strong earnings bursts and analyst upgrades caused stock surges, followed by profit-taking, adding volatility to the stock price.
In summary, Snowflake’s stock decline is driven by slower revenue growth, valuation multiple compression amid a challenging macroeconomic environment, intensifying competition, and typical market trading dynamics such as profit- taking after rallies. Investors remain cautiously monitoring growth rate stabilization, competitive positioning, and broader economic factors for the stock’s future direction.
