Why Snowflake Shares Are Sliding After Hours Despite an Earnings Beat
Snowflake ($SNOW) delivered headline numbers that topped Wall Street expectations, but the stock still fell sharply in after-hours trading. The decline reflects investor concern about the company’s forward outlook rather than its recent performance.
Earnings Beat the Street, but Guidance Disappointed
Snowflake posted stronger-than-expected fiscal Q3 results, with product revenue and profitability both coming in ahead of consensus. However, multiple outlets — including Benzinga and Seeking Alpha — noted that management’s Q4 product revenue guidance was only slightly above expectations, far below what bullish investors were hoping for.
Sources: Benzinga, Seeking Alpha
This “good quarter, light guide” dynamic is often enough to send high‑valuation tech stocks lower — especially those priced for accelerating growth.
Market Expected Faster Growth from AI-Driven Initiatives
Snowflake has been heavily positioned as an AI beneficiary, and investor expectations have risen accordingly. The company highlighted continued AI traction and strong customer adoption during the quarter, but the forward revenue outlook didn’t show the acceleration that many investors assumed would materialize.
When guidance fails to keep pace with the AI narrative, stocks with premium multiples often reprice quickly.
Consumption Trends Added Pressure
Snowflake’s usage-based model makes consumption patterns a critical metric. According to reporting from Reuters and CNBC, some analysts pointed to uneven or slower-than-modeled customer consumption trends, which can cause volatility in near-term revenue and raise questions about demand consistency.
Even modest signs of consumption softness can weigh heavily on Snowflake given its valuation and reliance on usage ramp-ups.
High Expectations Amplified the Reaction
Snowflake trades at one of the higher revenue multiples in the software space. That means:
- Beats must be meaningful
- Guidance must signal clear acceleration
- Commentary must point to strengthening usage trends