Are Investors Valuing Snowflake Stock Wrong? Here's Why It's Brad Gerstner's Largest Position

Snowflake Inc's SNOW stock price has melted alongside several high growth names as investors focus on companies generating profits right now in the face of rising rates. 

However, investors who are tossing Snowflake shares out of their portfolios may be valuing the company incorrectly, according to Altimeter Capital's Brad Gerstner.

"Please don't look at a one-year forward sales number. It's highly misleading for a business that's growing at 70, 80, 90%, particularly when they are generating free cash," Gerstner said Tuesday on CNBC.

It would be a completely different story if Snowflake's' business model was unproven and the company was burning a bunch of cash, but it's not, Gerstner said. 

He acknowledged that Snowflake's valuation was stretched when near the end of 2021, but after falling more than 50% from its highs, he sees significant upside opportunity. 

"In Q4 alone, they signed $1.4 billion in annual contract value. That's as much as their total revenue last year," Gerstner emphasized.

He noted that Altimeter is consolidating capital into its best ideas while the market is down, and Snowflake tops the list. 

"We think this is one of the biggest beneficiaries of the shift of all data workloads into the cloud and that's why it's the biggest position in our portfolio," Gersnter said.

See Also: If You Invested $1,000 In The Short Cathie Wood ETF At IPO, Here's How Much You'd Have Now

SNOW Price Action: Snowflake has traded between $164.29 and $405 over a 52-week period.

The stock was down 0.08% at $177.61 at press time, according to data from Benzinga Pro.

Photo: courtesy of Snowflake.