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Shares of Snowflake (NYSE:SNOW), a cloud data-warehouse software company, dropped by 8% in extended trading on Wednesday. This decline occurred despite the company reporting quarterly results that exceeded expectations, as a widening net loss and rising costs dampened the market's response. Additionally, the company's decision to leave its gross margin forecast unchanged, despite raising its annual revenue outlook, contributed to the after-hours weakness.
Snowflake, based in Bozeman, Montana, has seen its stock fall approximately 43% from its 2024 high through Wednesday's close. The company's challenges have been compounded by the appointment of a new CEO in February and a cyberattack disclosed in late May, which compromised the data of several high-profile clients, including AT&T and Live Nation.
A technical analysis of Snowflake's chart reveals several key price levels to observe in the wake of the recent post-earnings decline.
Testing the Falling Wedge Breakout
After peaking in early February, Snowflake's shares formed a falling wedge, a chart pattern often associated with a potential upward price movement. The stock broke out of this wedge earlier this month, following a rally from its lower trendline. This rally was accompanied by increased trading volume ahead of the company's quarterly results, suggesting that market participants were anticipating a significant move post-earnings. However, the direction of the move turned out to be downward, with shares falling 8% to $124.23 in after-hours trading.
Critical Price Levels to Observe
The first significant level is around $123, where the shares may find support near the June swing low. This area also aligns with the recent range of prices near the top trendline of the falling wedge pattern.
If the stock does not maintain this level, it may drop to the $108 region, where it could find support near the lower trendline of the wedge pattern, which also coincides with the stock's 52-week low.
Finally, if the stock continues to trend downward similarly to its movement from early July to early August, the price might reach the lower trendline of the wedge around $95.
