The leading cloud data warehousing company Snowflake (NYSE:SNOW) is scheduled to announce its Q1 FY’26 (quarter ending April 2025) earnings on May 21, reflecting a quarter where the organization is expected to continue capitalizing on its initiative to provide artificial intelligence tools to its clients. It is anticipated that revenues will increase by 21% year-over-year to around $1 billion, according to consensus estimates, while adjusted earnings are forecasted at $0.21 per share, which represents a 50% year-over-year rise. Snowflake has been enhancing its AI capabilities through strategic moves, including a multiyear partnership with Anthropic and the acquisition of AI startup Datavolo. By merging these AI capabilities with the company’s core data warehousing platform, Snowflake is simplifying the process for clients to create and operate AI applications without relocating their data across systems. This close integration has the potential to save clients time and lessen overall complexity. Snowflake has projected product revenues to fall between $955 million to $961 million for the quarter.
The company currently holds a market capitalization of $61 billion. Revenue for the past twelve months was $3.6 billion, and it incurred operational losses of $-1.5 billion along with a net income of $-1.3 billion. However, if you are looking for growth with reduced volatility compared to individual stocks, the Trefis High Quality portfolio offers an alternative, having outperformed the S&P 500 and delivered returns exceeding 91% since its inception.
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Snowflake’s Historical Odds Of Positive Post-Earnings Return
Here are some insights regarding one-day (1D) post-earnings returns:
- Across the last five years, there have been 18 earnings data points recorded, with 10 positive and 8 negative one-day (1D) returns identified. In summary, positive 1D returns occurred approximately 56% of the time.
- However, this percentage drops to 42% when we look at the data over the past 3 years instead of 5.
- Median of the 10 positive returns = 7.7%, and median of the 8 negative returns = -14%
Additional information regarding 5-Day (5D) and 21-Day (21D) returns post earnings is summarized, along with the statistics in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively lower-risk strategy (though not effective if the correlation is weak) is to investigate the correlation between short-term and medium-term returns following earnings, identify the pair with the highest correlation, and execute the corresponding trade. For instance, if 1D and 5D display the most significant correlation, a trader may choose to position themselves “long” for the next 5 days if the 1D post-earnings return is positive. Here is some correlation data derived from both a 5-year and a 3-year (recent) history. Note that the correlation 1D_5D denotes the relationship between 1D post-earnings returns and subsequent 5D returns.
Is There Any Correlation With Peer Earnings?
Occasionally, the performance of peers can influence post-earnings stock responses. Indeed, the market adjustment may commence prior to the earnings announcements. Here are some historical insights on the post-earnings performance of Snowflake stock in comparison to the stock performance of peers that reported earnings just before Snowflake. For a fair comparison, peer stock returns also reflect post-earnings one-day (1D) returns.
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