Technology

Snowflake drops amid warnings of a ‘violent selloff’

Shares of Snowflake Inc., which have doubled since its initial public offering last week, are “at risk of a violent sell-off,” according to Summit Insights, which began coverage of the software company with a sell rating.

Analyst Srini Nandury set a price target of $ 175, down 27% from Friday’s close, citing competition and the expensive valuation of the stock. The initiation is the first among companies tracked by Bloomberg since the shares began trading last week. The stock fell as much as 7% in US trading on Monday before cutting losses to trade at 2.8% at 10:03 a.m. New York time.

Snowflake is the most expensive name in all of technology, Nandury wrote in a note, and the company has “limited” differentiation compared to other data warehouses, while also competing with traditional vendors.

“For stocks to perform from current levels, Snowflake must run smoothly quarter over quarter, meet high expectations and grow in valuation,” Nandury said.

The shares have roughly doubled since going public in New York on Sept. 16, pushing Snowflake’s market value to $ 66.2 billion, ahead of companies like Dell Technologies Inc.The increase reflects appetite for investors for shares exposed to cloud technology, and has joined IPOs of cloud companies Sumo Logic Inc. and JFrog Ltd.

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