Warren Buffett is without doubt one of the most revered traders of our era. Regardless of his superior age, he’s nonetheless actively investing in progress shares that would be the future even after he’s gone. I all the time hold a detailed eye on the efficiency of his portfolio and I’ve seen one inventory that’s at 52-week lows.

In for the lengthy haul

The inventory is Snowflake (NYSE:SNOW). Buffett initially purchased the shares throughout its preliminary public providing (IPO) in late 2020. It was uncommon for him to purchase shares throughout an IPO, which exhibits me he was eager to become involved.

His funding of 6.1m shares on the time was valued at $735m. Since then, he hasn’t bought any of the inventory. From the IPO price of $120, he was up 100% earlier this 12 months. But Snowflake shares have taken a nosedive in latest months, with them now down at $127. Due to this fact, Buffett’s nonetheless up on his funding, however not by a lot.

Why the inventory has struggled

The inventory’s down by 33% over the previous 12 months. A part of that is because of the excessive expectations traders had coming into the 12 months. Due to this fact, although the latest monetary outcomes haven’t been horrible, they’ve been worse than anticipated. Consequently, the share price has moved decrease.

For instance, income for the newest quarter was $828.7m, representing 33% year-on-year progress. Nevertheless, traders have been anticipating this to be greater. So regardless of it being up on final 12 months, the inventory really fell after the outcomes got here out.

One other issue is the excessive valuation. I believe this was partly ignored throughout the pandemic, however now I believe it’s much more on individuals’s minds. The corporate’s loss-making and has been for a while. So to have a market-cap of $42bn (which was even greater earlier than the share price slide) is considerably questionable.

Discovering worth for the longer term

Buffett, like me, is a long-term investor. So I don’t assume he’ll be too involved proper now, even with the inventory at 52-week lows. Essentially, Snowflake’s a enterprise that ought to get to a scale the place it is going to make a revenue. It makes cash from the cloud-based information warehousing, so there’s loads of demand. I solely see this growing.

I additionally assume that investor expectations at the moment are decrease and so the danger of one other sharp share price fall on the subsequent outcomes is decrease.

The danger is that the enterprise doesn’t develop income to the extent the place it may well break even. Or it may take longer than anticipated, inflicting extra traders to drag the plug and promote their shares.

In the end, I believe it is a good place to begin shopping for Snowflake shares. I’m excited about shopping for some now, after which buying extra in coming months, to construct a place over time.