Snowflake shares have climbed roughly fifty percent this year, yet short sellers have not retreated. As of the August 28 close the stock sat at $327.08, off 0.62 percent on the day, while short interest held at 5.7 percent of the float, 18.8 million shares valued at $6.18 billion, a level the company has rarely seen since its 2020 debut. The divergence is stark: thirty-four of forty covering analysts rate the name a Buy, but the borrow data suggests a sizable cohort remains convinced the advance has outrun the fundamentals.
The valuation gap that feeds the bear case
Since its September 2020 listing Snowflake has never posted a GAAP profit. Fiscal 2026 ended with a $1.33 billion net loss, widening from $1.28 billion the prior year and $836 million in 2024. The first quarter of fiscal 2027 added another $296 million in red ink, pushing the four-quarter average of annualized diluted EPS losses to negative eighty-eight cents. Meanwhile the shares have risen sixty-five percent over the trailing twelve months and roughly two hundred percent from the September 2024 low. At current prices the stock trades at a premium that leaves little margin for any deceleration in growth.
Revenue momentum shows acceleration but the bar is rising
Top-line growth has actually picked up. First-quarter fiscal 2027 revenue rose thirty-three percent year over year to $1.39 billion, with product revenue climbing thirty-four percent to $1.33 billion, an improvement on the thirty percent product growth recorded in the previous quarter. That acceleration is real, yet the market has already priced in a sustained high-velocity trajectory. Any hint of a slowdown would compress the multiple fast, and the short side is positioned for exactly that scenario.
Stock-based compensation keeps dilution in the spotlight
The deeper structural concern for skeptics is the compensation model. Stock-based compensation hit nearly $1.6 billion in fiscal 2026, consuming about thirty-five percent of revenue. Because SBC is a non-cash charge, it inflates operating cash flow without a corresponding cash outflow, a dynamic that short sellers routinely flag as low-quality earnings. Insider activity reinforces the narrative: over the past twelve months executives have sold $1.04 billion of equity across eight transactions with not a single purchase recorded.
A retention package that underscores the incentive structure
On July 15 the board granted chief executive Sridhar Ramaswamy a performance-based equity award valued at up to $448 million, covering one million shares across five tranches that vest only if the stock clears progressively higher price hurdles. The design aligns management with share-price appreciation, but it also guarantees continued dilution for as long as the milestones are met. For the short thesis, that is not a bug, it is the feature that keeps the borrow crowded.