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One Big Danger for Snowflake Investors

TheMotleyFool

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While Snowflake (NYSE: SNOW) is an exciting company with a great future, the stock might have the wrong kind of excitement over the next several months. This stock scares me for two reasons.

One, the valuation is insane. Snowflake is priced at 200 times revenues. That's way higher than Zoom (NASDAQ: ZM) or Datadog (NASDAQ: DDOG). Snowflake has a $100 billion market cap, and it hasn't even made $1 billion in revenues yet. This valuation means there's a lot of room to fall just on the basis of multiple contraction.

Image source: Getty Images.

Source Fool.com

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