New Trade for October 20th, 2021

Stocks were flat this morning, with the major indices nearing their record highs.  Following yesterday’s advance, the Dow is just 0.49% from its record, while the S&P 500 and the Nasdaq Composite sit 0.58% and 1.78% below their highs.  

The media and advertising industry is experiencing major changes, including increasing scrutiny around consumer privacy and data use, shifting viewership habits, and rapidly changing industry standards.  Today we’ll discuss the innovator that’s morphing to meet those ever-changing needs and to “lead the industry into a future built on transparency, trust, and performance.”

 Snowflake provides cloud-based ways for companies to utilize their data over the internet better.  The company offers cloud-based data storage and analytics, generally termed “data-as-a-service.” Snowflake’s platform offers Data Cloud, an entire ecosystem that enables customers to consolidate and share data.  And now they are offering a tailored version of their Data Cloud, explicitly aimed at the media and advertising industry.  

Yesterday, Snowflake announced the launch of Media Data Cloud.  An addition to their offering that will enable organizations to be successful in the new advertising landscape by empowering them to easily access and collaborate on data without ever leaving Snowflake’s environment.

Snowflake’s Media Data Cloud includes data clean rooms that enable any publisher, advertiser, agency, or ad tech organization to design their own privacy and collaborative data environment. This element was previously reserved for larger technology platforms.

“The Snowflake Media Data Cloud will fuel the next wave of innovation in the advertising ecosystem.  Snowflake is uniquely positioned to enable data connectivity and collaboration in a privacy-compliant manner for transparent and secure advertising capabilities.  Our customers and partners are able to execute this type of collaboration for identity, targeting, and measurement while also maintaining important privacy and governance,” said Bill Stratton, the Global Head of Media, Entertainment and Advertising Vertical at Snowflake. “Businesses with democratized data access, seamless collaboration, and the highest standards of data governance will now be leading our industry into a future built on transparency, trust, and performance.”

The stock has received multiple upgrades and price target increases.  Yesterday JMP Securities raised their price target for SNOW on its high growth potential compared to peers.  Earlier this month, after conducting a series of field checks, BTIG analyst Gary Powell upgraded SNOW to Buy from Neutral.  After a deeper investigation on spending trends with Snowflake and the broader competitive environment, Powell believes Snowflake is “sitting in front of a huge opportunity in a rapidly growing data analytics software market.” The analyst thinks the company has” multiple competitive advantages” over its cloud service provider competitors.  

It’s not just media and advertising that’s driving business for SNOW.  Every company on the planet is chasing the cloud right now.  Amid the ongoing digital transformation of almost every industry, the need for safe and efficient cloud platforms should drive the cloud industry’s growth.  The cloud computing market is expected to grow at an 18% CAGR to $303.07 billion by 2025. 

SNOW’s revenues for its fiscal second quarter, ended July 31st, 2021, increased 104.4% year-over-year to $272.20 million.  The company’s gross profit came in at $189.75 million, up 125.4% from the prior year period. Its operating loss declined 62.4% year-over-year to $21.90 million.  While its net loss increased 144.4% year-over-year to $189.72 million, its loss per share decreased 51.1% year-over-year to $0.64. As of July 31st, 2021, the company had $698.55 million in cash and cash equivalents.  Snowflake will be looking to display strength during its next quarterly earnings call, slated for December 1st.

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