Snowflake Inc. (SNOW) saw its stock decline 18% in early trading on December 7, 2025, after reporting weaker-than-expected Q3 revenue growth and raising concerns about long-term profitability. Investors are reassessing the company’s path to sustained margins amid rising competition in the cloud data warehousing sector.
- Snowflake (SNOW) shares dropped 18% to $112.30 on December 7, 2025
- Q3 revenue of $984 million missed consensus by $36 million
- Adjusted EBITDA margins fell to 12% from 19% YoY
- Net dollar retention rate declined to 104%
- Gross profit margin dipped to 73%
- Forward P/E ratio at 42, above sector average of 28
Snowflake’s share price dropped sharply to $112.30 per share, marking its largest one-day decline since early 2023, following the release of its third-quarter financial results. The company reported revenue of $984 million, up 18% year-over-year but below the consensus estimate of $1.02 billion. Adjusted EBITDA margins narrowed to 12%, down from 19% in the same quarter last year, signaling continued pressure on cost discipline. The decline comes amid growing scrutiny over Snowflake’s ability to maintain pricing power and customer retention in a crowded market. Competitors including Amazon Web Services (AWS), Microsoft Azure, and Google Cloud have intensified their data analytics offerings, contributing to a 5% reduction in Snowflake’s net dollar retention rate, which now stands at 104%. Despite a strong 22% growth in new customer acquisition—adding 417 net new customers—the company’s gross profit margin slipped to 73%, its lowest level in two years. Market analysts are divided on the outlook. While some maintain a 'buy' rating, citing the company’s dominant position in cloud data platforms and recurring revenue stability, others warn that continued margin erosion could undermine investor confidence. The stock’s forward price-to-earnings ratio now stands at 42, well above the sector average of 28, suggesting overvaluation if growth fails to accelerate. The sell-off has affected broader tech sentiment, with the Nasdaq Composite falling 0.7% as investors reassess high-growth cloud stocks. Institutional investors have reduced exposure, with insider trading data showing a net $42 million in stock sales over the past three weeks.