SAN FRANCISCO, CA – (March 15, 2024) – National plaintiffs law firm Lieff Cabraser Heimann & Bernstein, LLP encourages investors in Snowflake Inc. (“Snowflake” or the “Company”) (NYSE: SNOW) who suffered losses from purchasing Snowflake Class A common stock between September 16, 2020 and March 2, 2022, inclusive (the “Class Period”), to contact us immediately regarding a pending securities fraud class action against Snowflake. The deadline to apply to be lead plaintiff is April 29, 2024.
Class Period: September 16, 2020 – March 2, 2022
Lead Plaintiff Motion Deadline: April 29, 2024
Case information: lieffcabraser.com/securities/snow
Contact us: Email or text investorinfo@lchb.com or call 1-800-541-7358
Snowflake, incorporated in Delaware and formerly headquartered in San Mateo, California, is a cloud-based data storage and computing company. The Company provides access to its platform using a consumption-based model, whereby enterprise customers typically enter into capacity arrangements with a term of one or more years. Under such arrangements, customers commit to consume a certain amount of data resources over the term of the arrangements. Customers then pay in advance to receive credits, which are deducted and recorded as Company revenue as resources are consumed. When a customer’s consumption during the contract term falls below the capacity commitment amount, it may roll over unused credits to future periods as long as it continues to purchase some amount of additional consumption capacity. At the time of Snowflake’s initial public offering (“IPO”), on September 16, 2020, 90% of its revenue was generated through capacity arrangements. The complexity and novelty of Snowflake’s platform presents customers with a steep learning curve, which grants Company sales representatives latitude in guiding customers’ decision-making regarding the number of credits to purchase.
The action alleges that, throughout the Class Period, Defendants knowingly and systematically oversold consumption credits to customers, often at unsustainably discounted rates, giving investors the misleading impression that consumption of and demand for Snowflake’s products and services were stronger than they actually were. At the same time, Snowflake and its senior executives repeatedly made misleading statements about “strong consumption trends” and sustained market demand for its products and services. In reality, customers were not using all of their contracted-for credits and were poised to roll over a significant amount of unused credits or refuse to renew their capacity arrangements altogether, disrupting future sales.
Meanwhile, Company insiders, including Chief Executive Officer Frank Slootman and Chief Financial Officer Michael P. Scarpelli, both Defendants in the action, capitalized on Snowflake’s increased stock price resulting from Defendants’ false and misleading statements, selling over $1.8 billion worth of Snowflake stock at artificially inflated prices.
On March 2, 2022, after market hours, Snowflake reported its results for its fourth fiscal quarter ended January 31, 2022 and fiscal 2023 guidance. The Company slashed its projected product revenue growth rate for fiscal 2023. This decline can be attributed to the expiration of a significant number of one-year capacity arrangements sold to customers around the time of the IPO. On this news, the price of Snowflake Class A common stock plummeted $40.67 per share, or approximately 15.37%, from its closing price of $264.69 per share on March 2, 2022, to close at $224.02 per share on March 3, 2022, on highly elevated trading volume. The stock price continued to drop another approximately 14.47% over the next few days, closing at $191.61 per share on March 8, 2022.
About Lieff Cabraser
Lieff Cabraser Heimann & Bernstein, LLP, with over 125 attorneys in offices in San Francisco, New York, Nashville, and Munich, Germany, is an internationally-recognized law firm committed to advancing the rights of investors and promoting corporate responsibility. Repeatedly recognized as a “Plaintiffs’ Powerhouse” by Law360, Lieff Cabraser has litigated some of the most important civil cases in the United States, and has assisted clients in recovering over $129 billion in verdicts and settlements. For over 50 years, Lieff Cabraser has remained committed to ensuring access to justice for all.
Source/Contact
Sharon Lee
Lieff Cabraser Heimann & Bernstein, LLP
415 956-1000
slee@lchb.com
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