Snowflake’s stock can double from here if the cloud-data platform outshines top rival Oracle, strategist says

2020 09 16T205456Z_1795372151_RC2WZI9EZJOI_RTRMADP_3_SNOWFLAKE IPO.JPG
  • Snowflake’s stock could double from current levels if it outperforms its biggest enterprise-data rival Oracle, a chief investment strategist told CNBC on Thursday.
  • California-based Oracle provides “on-premise” data warehousing, whereas Snowflake offers “off-premise” data storage, King Lip of Baker Avenue Asset Management pointed out.
  • Cloud computing services, or off-premise data, are gaining more popularity due to higher flexibility in use of remote resources, saving organizations the cost of servers and other equipment.
  • Snowflake’s shares “could double from here” as long as it continues to perform well and outdo Oracle, Lip said.
  • Shares closed 111% higher at $253.93 on Wednesday.
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Snowflake’s shares “could double from here” as long as it continues to perform well and outdo its biggest rival Oracle, King Lip, chief strategist at Baker Avenue Asset Management, told CNBC on Thursday. 

Cloud company Snowflake exploded as high as 165% in its public-market debut on Wednesday after raising $3.4 billion in the largest-ever software IPO that even managed to draw in legendary investor Warren Buffett.

Enthusiasm around Snowflake’s listing indicates that risk appetite for companies that are offering shares to the public for the first time remains high, despite an unpredictable market environment, Lip said.

He pointed out that Oracle, one of Snowflake’s biggest rivals, provides “on-premise” data warehousing in which a group of servers are privately owned and controlled within the physical confines of an enterprise. 

Conversely, Snowflake offers “off-premise” data warehousing, or a model which consists of shared resources managed by a third-party vendor, with data secured by state-of-the-art encryption.

“In theory, more and more customers are moving their business from on-premises to off-premises,” Lip said on CNBC.

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The San-Mateo based unicorn ticks “a lot of boxes” that investors are interested in including superior growth, cloud storage, data analytics, high customer retention, and saving on client money.

The only drawback, according to Lip, may be its valuation. But, if its growth continues, “the valuation may look cheap at current levels,” he said.

Snowflake trades under the ticker symbol SNOW. The firm sold 28 million shares at $120 each, pricing the stock above its prior range amid strong investor demand. 

Shares closed 111% higher at $253.93 on Wednesday.

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