Snowflake has recently announced raising $2 bn of convertible debt to buy back $ 575m of stock with the rest for general corporate purposes. Sure, why not.
Except $SNOW has already repurchased more than $1.4 bn at higher prices. In addition, they have $3 bn in cash with (previously) $0 debt.
In the 6 months ending in 2024, they've already repurchased 5,939 shares at an average cost @ 154.30, for a total of $916 million. In the past 18 months alone they've spent $1.4 bn on share repurchases alone at higher share prices. Shares are down 40% YTD so maybe not the best move. They've now tarnished their balance sheet just to buy back overpriced shares.
What's worse is their shares are pretty overvalued, trading at 37x forward FCF. In addition, their growth metrics are weakening, with revenue growth rates, gross margins, operating margins, and FCF margins dropping across the board. What in the world is management doing?
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