Although stocks are rising again, many investors have learned a harsh lesson in recent years. High valuations in the previous bull market often left investors holding the bag in the 2022 bear market when stock prices fell. This prompted investors to pay closer attention to one factor -- valuation.

Snowflake (NYSE: SNOW) was no exception to this issue, as it lost as much as 70% of its value at a low point in the market. Nonetheless, Warren Buffett's team at Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) has owned a stake in the company since before its IPO, so an elevated valuation did not prevent a partial recovery. With the indexes in a new bull market, investors have good reason for ignoring this valuation.

On the surface, Snowflake stock appears overvalued and risky. The company has not yet turned profitable, meaning it does not have a P/E ratio. Moreover, at a price-to-sales (P/S) ratio of 25, it is nearly 10 times the S 500's average P/S ratio of 2.7.

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Source Fool.com