Snowflake stock drops as Buffett sells stake, Wells Fargo cuts rating

Shares of Snowflake (NYSE:SNOW ) fell more than 3% premarket Thursday after Wells Fargo downgraded the stock and Berkshire Hathaway, led by Warren Buffett, sold its entire stake in the company.

Snowflake, which has been a high-flyer in the tech sector, faces mounting challenges, leading Wells Fargo to cut its rating from Overweight to Equal Weight and slash its price target from $200 to $130.

Wells Fargo analysts highlighted a series of headwinds that are converging at a particularly tough time for Snowflake.

"The narrative has shifted meaningfully," the analysts noted, pointing to new management, rising competition, and questions about the company's technological edge.

They also cited a recent data breach that could lead to customer churn, with "multiple breach-impacted customers stating plans to move off of SNOW," including some high-value accounts.

The downgrade comes just before Snowflake's upcoming Q2 earnings report, where the company is expected to show only modest quarter-over-quarter growth.

Wells Fargo expressed concern that new products may not contribute meaningfully to results yet, potentially creating a "near-term air pocket on top-line growth."

With Snowflake shares still trading at a premium, Wells Fargo sees limited upside in the near term, stating that the stock is likely to remain "range-bound until stabilization more clearly surfaces."

The analysts also lowered their revenue and earnings estimates for FY26 and FY27, further dampening expectations.

Snowflake's challenges are now compounded by the news that Warren Buffett's Berkshire Hathaway sold its entire stake in the company. At the end of Q1, Berkshire held 6.1 million shares of SNOW valued at about $989 million, but the latest filing shows it has now sold its holdings in the company.

Source: Investing.com