Buy or Sell Snowflake Stock Ahead of Earnings?

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CHONGQING, CHINA – AUGUST 24: In this photo illustration, a hand holds a smartphone displaying the logo of Snowflake Inc. (NYSE: SNOW), an American cloud-based data warehousing company, with the company’s emblem seen in the background on August 24, 2025 in Chongqing, China. (Photo illustration by Cheng Xin/Getty Images)

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Snowflake (NYSE:SNOW) is anticipated to release its Q2 FY’26 results on Wednesday, August 27, 2025 (January fiscal year). Consensus estimates suggest earnings will be approximately $0.27 per share, an increase from $0.18 per share in the same quarter a year ago, while revenues are expected to increase by 25% to $1.09 billion. This growth is likely to be fueled by heightened adoption of the company’s cloud-based data warehousing solutions. Furthermore, the company’s strategic investments in artificial intelligence, through offerings such as Snowflake Cortex – a suite of AI-driven features designed to utilize large language models directly within the Snowflake data cloud – may also contribute to revenue growth. Additionally, Snowflake has achieved a robust net revenue retention rate of 124% as of the last quarter, indicating strong expansion among existing clients.

The company currently holds a market capitalization of $64 billion. Revenue generated over the past twelve months amounted to $3.8 billion, reflecting operational losses, with $-1.6 billion in operating losses and a net income of $-1.4 billion. Although much will depend on how the results compare to consensus and expectations, understanding historical patterns might enhance your chances if you are an event-driven trader.

There are two approaches to achieve this: either familiarize yourself with the historical odds and position yourself ahead of the earnings announcement, or analyze the correlation between immediate and medium-term returns following earnings and adjust your positioning accordingly post-announcement. If you prefer lower volatility compared to individual stocks, the Trefis High Quality portfolio offers an alternative – having surpassed the S&P 500 and achieved returns exceeding 91% since its inception.

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Snowflake’s Historical Odds of Positive Post-Earnings Return

Here are some insights into one-day (1D) post-earnings returns:

• Over the last five years, 19 earnings data points have been recorded, yielding 11 positive and 8 negative one-day (1D) returns. In summary, positive 1D returns occurred approximately 58% of the time.
• This percentage, however, decreases to 50% when considering data from the last 3 years rather than 5.
• The median of the 11 positive returns is 7.8%, while the median of the 8 negative returns is -14%

Additional information regarding the observed 5-Day (5D) and 21-Day (21D) returns following earnings is summarized alongside the statistics in the table below.

Correlation Between 1D, 5D, and 21D Historical Returns

A relatively less risky strategy (though not applicable if the correlation is low) involves understanding the correlation between short-term and medium-term returns post-earnings, identifying a pair that exhibits the highest correlation, and executing the appropriate trade. For instance, if 1D and 5D demonstrate the highest correlation, a trader can position themselves “long” for the subsequent 5 days if the 1D post-earnings return is positive. Presented below is some correlation data based on a 5-year and a 3-year (more recent) history. Note that the correlation 1D_5D pertains to the relationship between 1D post-earnings returns and the following 5D returns.

Is There Any Correlation With Peer Earnings?

At times, the performance of peers can impact the stock reaction following earnings. In fact, pricing may begin prior to the earnings announcement. Below is some historical data depicting the past post-earnings performance of Snowflake stock compared to the stock performance of peers that reported earnings shortly before Snowflake. For a fair comparison, peer stock returns also reflect post-earnings one-day (1D) returns.

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