Snowflake Stock Just Took a Hit: 3 Reasons I'm Not Buying the Dip

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than Snowflake ›Snowflake (NYSE: SNOW) shares slid in after-hours trading on Wednesday, Dec. 3, when the data cloud platform specialist reported fiscal third-quarter results.Revenue growth remained impressive, and management leaned heavily on artificial intelligence (AI) themes during the earnings call. The tech company, which provides data warehousing and analytics tools that run across major public clouds, continues to add large customers and maintain a robust net revenue retention rate. But this wasn't enough to excite Wall Street in light of a valuation that already prices in near-flawless execution.Does the market's decision to punish the stock make sense? Or is this a buying opportunity?Here are three reasons I personally don't think Snowflake stock is worth buying on this dip.Image source: Getty Images.Snowflake's fiscal 2026 third-quarter revenue rose 29% year over year to $1.21 billion. Yet the company still reported a generally accepted accounting principles (GAAP) net loss of $294 million, only slightly better than the approximately $324 million loss it posted in the third quarter of fiscal 2025.The cumulative picture is even starker. Over the first nine months of fiscal 2026, Snowflake's GAAP net loss reached about $1.02 billion, compared with roughly $958 million in the same period a year earlier. That kind of deficit is hard to square with a business that already produces more than $1 billion in quarterly revenue and has a market capitalization of about $85 billion.A major driver of Snowflake's expenses is stock-based compensation, which came in at $442 million in the quarter, up from roughly $363 million in the year-ago period, which works out to well over one-third of revenue. On a GAAP basis, operating margin was -27% in the third quarter, while the non-GAAP operating margin, which strips out stock-based compensation and certain other items, was 11%.Snowflake does produce positive free cash flow, and management is targeting an impressive adjusted free cash flow margin of 25% for fiscal 2026. Even so, the persistent GAAP losses show how dependent the company remains on stock-based compensation to support its business.Snowflake's growth profile remains enviable, yet the trend is clearly slowing. 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