Shares Slumped 8% in Extended Trading on Wednesday

Source: TradingView.com
Source: TradingView.com

Key Takeaways

  • Shares in cloud data-warehouse software company Snowflake dropped 8% in extended trading on Wednesday after a widening net loss and rising costs overshadowed quarterly results that came in ahead of expectations. 
  • The share price broke out from a falling wedge pattern earlier this month, but that move looks to be tested following the stock’s projected post-earnings fall.
  • Snowflake shares may find buying interest on the chart at key price levels including $123, $108, and $95.

Shares in cloud data-warehouse software company Snowflake (SNOW) dropped 8% in extended trading on Wednesday after a widening net loss and rising costs overshadowed quarterly results that came in ahead of expectations. Moreover, despite the firm raising its annual revenue outlook, it left its gross margin forecast unchanged, also possibly contributing to after-hours weakness.

The Bozeman, Montana-based company’s stock, which has tumbled around 43% from its 2024 high through Wednesday’s close, remains out of favor with investors after naming a new CEO in February and disclosing a cyberattack in late May in which data of several high-profile clients, including telecom giant AT&T (T) and TicketMaster-parent Live Nation (LYV), was compromised.

Below, we take a closer look at Snowflake’s chart and use technical analysis to identify important price levels to watch out for amid the stock’s projected post-earnings sell-off.

Falling Wedge Breakout Put to Test

Since topping out in early February, Snowflake shares formed a falling wedge, a chart pattern that signals a potential upward price movement. 

Indeed, the stock broke out from the wedge earlier this month following a rally from its lower trendline, with volume inching higher ahead of the company’s quarterly results, indicating investors were positioning for a post-earnings move. However, that move looks to be lower, as shares fell 8% to $124.23 in after-hours trading.

Amid a post-earnings fall, investors should monitor three lower chart levels where Snowflake shares could attract buying interest.

Lower Price Levels to Monitor

The first sits around $123, an area where the shares may encounter support near the June swing low, which also corresponds with a range of recent prices situated close to the falling wedge pattern’s top trendline.

A failure to hold this level could see the shares slide to the $108 region, where they may attract buying interest near the wedge pattern’s low, which also marks the stock’s 52-week low.

Finally, if the stock makes a similar downward trending move to its most recent leg lower from early July to early August, the price could fall to the wedge’s lower trendline around $95. We project this by taking the bars pattern from the down trending move and positioning it from Wednesday’s high.

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