Shares of data storage and analytics company Snowflake (NYSE: SNOW) dropped by 12.4% during August, according to data provided by S&P Global Market Intelligence. The stock got crushed after the company reported results for its fiscal 2025 second quarter on Aug. 21 -- but the drop in price confused many investors.

Here's why the stock's drop was confusing for some: In the quarter, Snowflake generated product revenue of $829 million, which was way ahead of the $810 million that had been the top of management's guidance range. Moreover, management subsequently raised its full-year revenue guidance. In other words, business seems to be better than expected.

However, the profit trends look problematic. The company expects its adjusted gross profit margin to drop from 78% in fiscal 2024 to 75% in its fiscal 2025, and its adjusted operating margin is expected to fall from 8% to 3%.

Continue reading

Source Fool.com