$SNOW Buyback
Hot take for the Commonstock

$SNOW stock buyback makes sense. They are an extremely capital light business and don’t have many expensive avenues to reinvest. It is better to return capital to shareholders than to overpay for an acquisition that is not needed.
Steve Matt's avatar
I’m ok with the buyback but they aren’t returning capital to me. They’re offsetting SBC dilution.
Young Money Capital's avatar
@interrobangbros I find it funny that people are so critical of Snowflakes SBC of all fast growth tech companies. They are projected dilution of less than 1% next year. While SBC is a large percent of revenue currently, revenue is scaling much faster than SBC.
Steve Matt's avatar
@youngmoneycapital So, a couple things there.
  1. I’m not critical. I’m a shareholder. Just pointing out the fact that they diluted shareholders by 6% last year, 18MM shares at current price of $154.50, which is potentially $2.7B worth of shares.
  1. They are projecting for shares outstanding to be 363MM at the end of FY24. That’s 14% dilution. Not sure how you got 1%.
Young Money Capital's avatar
@interrobangbros in response to 1. It is a fair point. 2. You need to compare non-gaap diluted shares outstanding with non-gaap diluted shares outstanding. I’m seeing 359mm increasing to 363mm. They disclose shares outstanding very weirdly.
Steve Matt's avatar
@youngmoneycapital Great call on my reading the PR wrong. Their PR formats poorly on mobile so the 363 doesn’t align with non-GAAP. That just circles back to my original point though that they’re using that $2B buyback simply of offset dilution. If they weren’t, they’d be guiding for a decrease in diluted shares outstanding and as you pointed out, they’re guiding for basically flat.
Modern Growth Investing's avatar
looks like end of saas growth era for a while, the industry has pivoted to profitability and buybacks.

sure i own a lot of saas names and dont mind the slowdown, but the industry is not a "hot" industry anymore for sure, except for a few names.

thanks for the $SNOW update, wasnt aware.
Rihard Jarc's avatar
Would be better if they just stabilize/cut SBC.



Already have an account?