Although major stock indexes have ignored concerns over the Evergrande debt crisis, the market is expected to remain volatile as the Fed seeks to decline, the number of cases remains stubbornly high and the economy slows.
Along with a low interest rate environment, growing demand for technological products and solutions in a context of ongoing digitization and continuous innovation is expected to continue to drive the growth of the industry. Technology spending in the United States is expected to increase 6.7% in 2022.
However, a bullish environment has led some tech stocks to reach price points well above their intrinsic values. Given the fundamentals and growth outlook, technology stocks Snowflake Inc. (SNOW), Cloudflare, Inc. (REPORT), Carvana Co. (CVNA) and Bill.com Holdings, Inc. (INVOICE) appear to be far too expensive at their current price points. Thus, these stocks could experience a pullback amid market volatility.
Snowflake inc. (SNOW)
SNOW provides a cloud-based data platform that enables customers around the world to consolidate data into a single source to generate business insights, build data-driven applications, and share data. Its platform enables the creation of its private data exchange to share and collaborate with business partners, suppliers and employees in a centrally managed data hub.
On September 22, 2021, SNOW and Citigroup Inc. (VS) announced a strategic initiative to reinvent the way data flows between financial services transactions to provide a seamless solution for post-trade processes across the industry. SNOW Financial
Data Cloud Services will help C share and securely access data to help launch new customer-centric products and services, create the fintech platforms of the future, and meet regulatory compliance requirements.
SNOW’s non-GAAP operating loss decreased 62.4% from the prior year period to $ 21.90 million for the second fiscal quarter ended July 31, 2021. The net loss of the company amounted to $ 189.72 million, down 144.4% from the prior year period. Its loss per share was $ 0.64 for the quarter, indicating a 104.7% year-over-year decline. SNOW had Cash and cash equivalents of $ 698.55 million as at July 31, 2021, which represents a decrease of 14.8% from the fourth quarter of fiscal 2021 ended January 31, 2020.
Analysts expect SNOW’s EPS to remain negative for the next several quarters of this year and next year. The stock’s EPS is expected to decline at a marginal rate per year over the next five years. Over the past nine months, its price has fallen 7.6% to close yesterday’s trading session at $ 321.50.
In terms of EV / forward sales, SNOW is currently trading at 78.21x, which is 2336.2% above the industry average 4.32x. In terms of futures price / sales, SNOW is currently trading at 82.70x, 1938.7% higher than the industry average of 4.06x.
SNOW’s poor outlook is reflected in its POWR odds. The stock has an overall rating of D, which is equivalent to Sell in our proprietary rating system. POWR scores are calculated by considering 118 different factors, each factor being weighted to an optimal degree.
SNOW has an F rating for value and a D rating for stability and quality. In the 72 actions classified D Technology – Services industry, it is ranked # 68.
To see additional POWR ratings for SNOW’s Growth, Sentiment and Momentum, Click here.
Cloudflare, Inc. (REPORT)
NET operates a cloud platform that provides a range of network services to various industries and governments around the world. The company provides businesses with a unified control plane to ensure the security, performance, and reliability of their on-premises, hybrid, cloud, and Software-as-a-Service (SaaS) applications.
On September 22, 2021, NET joined Microsoft Corporation (MSFT) Microsoft Intelligent Security Association (MISA), an ecosystem of independent software vendors and managed security service providers who have integrated with Microsoft Security to better defend against a world of growing cybersecurity threats. With integration,
Azure Active Directory B2C customers and other members of the MISA Partner Catalog can access NET’s web application (WAF) to protect their applications against sophisticated cyber attacks.
In the second fiscal quarter ended June 30, 2021, NET’s operating loss was $ 28.87 million, up 16.9% from the prior year period. While its non-GAAP net loss declined 24.1% year-on-year to $ 7.29 million, its non-GAAP loss per share declined 33.3% year-over-year to $ 0.02.
NET EPS is expected to remain negative over the next few quarters of the current year and into next year. Over the past nine months, the stock has gained 65.7% to close yesterday’s trading session at $ 135.67.
In terms of EV / forward sales, the NET is currently trading at 63.53x, which is 1501.1% above the industry average 3.97x. NET has a forward price / sell 67.70x, 1569.1% higher than the industry average of 4.06x.
NET’s POWR ratings are consistent with this grim outlook. The stock has an overall rating of D, which translates to Sell. Additionally, NET has an F rating for value and a D rating for stability. In addition, it is ranked # 20 out of 25 stocks in the D ranking Software – Security industry.
In addition to the POWR ratings that I have highlighted, one can see NET’s ratings for momentum, quality and growth, here.
Carvana Co. (CVNA)
CVNA operates an e-commerce platform for buying and selling used cars. Its platform allows customers to search, identify and inspect a vehicle using its 360-degree vehicle imaging technology and schedule delivery or pickup.
CVNA expanded its reach in Missouri by announcing the offer of contactless home delivery the next day to residents of the Joplin and Springfield area on September 22, 2021. Pioneering online car buying, with the offers its patented 360-degree virtual system. vehicle viewing, seven day return policy, and allowing customers to skip the dealership and shop, CVNA hopes to see good sales in the months to come.
CVNA’s total expenses for the second fiscal quarter ended June 30, 2021 were $ 470 million, an increase of 96.7% over the prior year period. As of June 30, 2021, the company had $ 201 million in cash and cash equivalents, down 33.2% from the year ended December 31, 2020.
Analysts expect the stock’s EPS to remain negative over the next few quarters of this year and into next year. Additionally, CVNA’s EPS is expected to decline at a rate of 210.5% per year over the next five years.
CVNA’s forward EV / EBITDA of 474.72x is 4,714.4% above the industry average 9.86x. In terms of futures price / delivery, CVNA is currently trading at 112.66x, which is 3,226.2% above the industry average of 3.39x. CVNA fell 10.7% over the past month to close yesterday’s trading session at $ 319.25.
It’s no surprise that CVNA has an overall F rating, which translates into a strong sale in our POWR rating system. Additionally, the stock has an F rating for value and quality and a D rating for growth and stability. Of the 76 stocks listed on F the Internet industry, CVNA is ranked # 73.
Click here to see additional POWR ratings for CVNA (Sentiment and Momentum).
Bill.com Holdings, Inc. (INVOICE)
BILL provides cloud-based software that simplifies, digitizes and automates back office financial operations for small and medium businesses around the world. The company provides invoicing workflow, payment processing, business document filing, electronic invoicing, and mobile application management services.
On September 1, 2021, BILL acquired Invoice2go, a leading provider of mobile accounts receivable (AR) software. Invoice2go’s mobile solution enables businesses to interact with their customers, develop offers, send invoices quickly and get paid faster. With BILL’s payments expertise, extensive network and strong go-to-market capabilities, combined with Invoice2go’s product capabilities, both companies are eager to enhance a company’s digital transformation. small and medium-sized enterprise.
For its fiscal second quarter ended June 30, 2021, BILL’s non-GAAP operating loss increased 1218.7% year-over-year to $ 6.20 million. The company’s non-GAAP net loss was $ 5.82 million, compared to net income of $ 293,000 for the prior year period. As of June 30, 2021, the company had $ 509.62 million in cash and cash equivalents, down 11.2% from the same period last year.
Analysts expect the stock’s EPS to remain negative over the next few quarters of this year and into next year. BILL’s EV / Forward Sales of 57.22x is 1,301.5% above the industry average 4.08x. In terms of futures price / sales, BILL is currently trading at 57.93x, which is 1317% above the industry average of 4.09x. BILL gained 85.2% in the past nine months to close yesterday’s trading session at $ 276.90.
BILL’s POWR ratings reflect this grim outlook. The stock has an overall F rating, which equates to a strong sell in our proprietary rating system.
The stock has an F rating for value and quality and a D rating for growth, stability and sentiment. Click here to see additional notes for BILL’s Momentum.
BILL is ranked # 146 out of 149 stocks in the D-rated Software application industry.
SNOW shares were trading at $ 316.04 per share on Friday afternoon, down $ 5.46 (-1.70%). Year-to-date, SNOW has gained 12.31%, compared to a 19.78% increase in the benchmark S&P 500 over the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a particular interest in finding market inefficiencies. She is passionate about educating investors so that they can be successful on the stock market. Following…