SNOW Falls, Then Melts Up! What's it Mean for IPOs?

NYSE:SNOW   Snowflake Inc
Yesterday was an interesting session for Snowflake, which reported decent quarterly results on Wednesday night. The data-mining disruptor initially fell on the news as analysts fretted over its high valuations. But then buyers came out of the woodwork and plowed prices to their highest close in almost three months. The result was a large bullish outside candle and a bounce at the 50-day simple moving average ( SMA ).

The price action could be even more interesting for the broader “freshman class” of recent IPOs . Others including Palantir, DoorDash, Roblox and Upstart rallied after strong quarterly results. This follows several months of underperformance for most IPOs . Consider this chart showing improved relative strength in the Renaissance IPO Fund (IPO):

Three things may be going on. First, the Nasdaq-100 outperformed before earnings season because everyone was focused on results from giants like Apple and Microsoft . But now they’re mostly off the radar until mid-July.

Second, volatility is waning. That means correlations go down and stock picking goes back in style.

Third, Robinhood is expected to go public before the end of June. That could focus attention back on IPOs , including newcomers like SNOW.

In conclusion, the broader price action was already signaling a return to recent IPO stocks. Yesterday’s price action in SNOW – one of the most prominent last year – may further confirm the shift.

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Excellent analysis