Money & Markets Week Ahead for February 28, 2021: Snowflake Inc. (Nasdaq: SNOW) reports earnings this week — plus another IPO to watch.
Investors started getting nervous about the stock market last week as the Dow, Nasdaq and Russell indexes bounced back and forth.
Another big initial public offering (IPO) is slated for this week.
Here’s more of what to look for in the week ahead on Wall Street:
On the IPO Front
Another IPO is on the calendar this week.
Oscar Health Insurance Co. plans to price its IPO on Thursday, March 4. The company will list on the New York Stock Exchange under the ticker symbol OSCR.
What it is: Oscar Health Insurance Co. provides health insurance products and services and was founded in 2012.
The company offers insurance coverage for individuals and families as well as Medicare-eligible adults. Part of its individual coverage includes free virtual doctor’s visits.
Oscar also offers health insurance plans for small businesses.
It operates in 291 counties across 18 states. The company said its members had more than 5 million health care visits in 2020.
The company received at least $1.74 billion from investors such as Alphabet Inc. (Nasdaq: GOOGL), Fidelity Management Research, Formation8, General Catalyst, Khosla Ventures and Thrive Capital.
Its revenue dropped 5.2% from 2019 to 2020, and its operating margin was minus-86.9% in 2020.
The offering: The New York-based company intends to raise $1 billion by offering 31 million shares at a price range of between $32 and $34.
According to Renaissance Capital, existing shareholders intend to purchase $375 million worth of shares in the offering.
At the midpoint of the price range, Oscar Health would see a fully diluted market value of $7.7 billion.
Goldman Sachs, Morgan Stanley, Allen & Company, Wells Fargo Securities, Bank of America Securities and Credit Suisse are bookrunners on the deal.
Deeper Dive: Snowflake Inc. (SNOW) Earnings
Cloud data warehousing firm Snowflake Inc. (NYSE: SNOW) made big news when it priced its initial public offering in September 2020.
The IPO’s initial price range was $75 to $85, but that was revised to between $100 to $110 before it launched.
On its first day of trading, the stock reached above $300 per share for a massive gain. A pullback pushed those shares down, but it still saw a triple-digit gain on the first day.
The company was able to raise nearly $3.4 billion by selling 28 million shares. It was the largest software IPO in history — surpassing the 2007 IPO of VMWare Inc. (NYSE: VMW), which raised $1 billion.
Snowflake Stock Down 2% From Day 1 Trading
On Wednesday, the company will release its quarterly earnings report for the quarter ending January 31, 2021.
Over the last four quarters, the company has increased its total revenue, but its earnings per share remain stagnant.
Snowflake Revenue Up 164.5% Over Last 4 Quarters
Its earnings, however, are still in negative territory and experienced a $0.04 per share drop over the last two quarters.
Snowflake has been able to consistently raise its gross profit over the last four quarters.
In January 2020, the company reported profits of $53.2 million. That rose to $92.9 million in the quarter ending October 31, 2020.
Snowflake Gross Profit Jumps 75%
The consensus forecast is for Snowflake to continue reporting an increase in revenue but negative earnings per share.
Wall Street is expecting earnings of minus-$0.17 per share on revenue of $178.5 million.
I have a lot of high hopes for Snowflake, and the continued revenue momentum is encouraging. However, this stock is back down to Earth in terms of price.
Money & Markets Week Ahead: Data Dump
On Monday, the Institute for Supply Management (ISM) will release its Manufacturing Purchase Managers Index (PMI) report on business.
This monthly report examines positive and negative responses from managers regarding new orders, backlog of orders, inventories, employment and prices.
Any reading of the index over 50 is considered expansion in the manufacturing market, while 49 or below is considered contraction.
PMI Reading for January 2020 Down to 58.7
The index was as low as 41.5 in April 2020, thanks in large part to the coronavirus pandemic slowing down manufacturing.
It hit 60.7 in December 2020 but fell back to 58.7 in January 2021 as managers remained slightly optimistic about the first quarter of the year.
The February 2021 forecast for the PMI is to drop slightly to 58.6.
Earnings Reports
To finish off the Money & Markets Week Ahead, here’s a look at some of the key earnings reports due out this week:
Monday
Zoom Video Communications Inc. (Nasdaq: ZM)
Novavax Inc. (Nasdaq: NVAX)
Scientific Games Corp. (Nasdaq: SGMS)
Tuesday
Target Corp. (NYSE: TGT)
Ross Stores Inc. (Nasdaq: ROST)
AutoZone Inc. (NYSE: AZO)
Kohl’s Corp. (NYSE: KSS)
NV5 Global Inc. (Nasdaq: NVEE)
Wednesday
Snowflake Inc. (NYSE: SNOW)
Marvell Technology Group Ltd. (Nasdaq: MRVL)
Thursday
Broadcom Inc. (Nasdaq: AVGO)
Costco Wholesale Corp. (Nasdaq: COST)
Kroger Co. (NYSE: KR)
Ciena Corp. (NYSE: CIEN)
Friday
Big Lots Inc. (NYSE: BIG)
That’s all for this week.
Until next time…
Safe trading,
Matt Clark
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.