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The Adore Beauty Group Ltd (ASX: ABY) share price is nursing some losses today as the company looks to get the boot.

It appears revenue growth alone isn’t enough to retain a spot in the S&P/ASX All Technology Index (ASX: XTX). After suffering through a 68% fall in its share price, Adore Beauty is slated for removal from the index in the latest quarterly rebalancing.

The online cosmetics retailer is not alone in its abandonment by the tech-focused index. Joining in the rejection are nine other ASX-listed companies that failed to meet expectations.

Paltry profits don’t cut it

Since bursting onto the ASX scene in October 2020, Adore Beauty has delivered substantial improvements to its total revenue. However, the market has shifted during this time to be more appreciative of present profits rather than promised profits.

The online beauty and skincare product retailer has been unable to maintain a meaningful margin in the last 12 months. At the end of 2020, Adore Beauty achieved $4.49 million in earnings, representing a 2.7% earnings margin. However, this shrunk to a slim 0.1% margin by the end of 2021.

As a result, the Adobe Beauty share price has undergone heavy erosion since its addition to the ASX tech index back in March last year. The removal will be put into effect prior to the market opening on 20 June 2022.

Ultimately, this means funds tracking the All Tech Index will no longer need to hold Adore Beauty shares. In turn, the company is likely to be weighed down by selling pressure as these positions are liquidated.

On the bright side, the company still maintains its position in the S&P/ASX All Ordinaries Index (ASX: XAO).

How does the Adore Beauty share price compare?

Despite the fall in the Adore Beauty share price, it still appears relatively rich at a price-to-earnings (P/E) ratio of 467. Potentially investors are more prone to valuing the company on the price-to-sales ratio, given that it is currently prioritising growth.

In terms of P/S multiple, Adore sits between ASX-listed peers Cettire Ltd (ASX: CTT) and Redbubble Ltd (ASX: RBL) at 0.7 times sales.

The post Why is the Adore Beauty share price sliding 6% on Monday? appeared first on The Motley Fool Australia.

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• Why has the Adore Beauty share price tumbled 20% in a month?
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• Glowing: The Adore Beauty share price is soaring
• You beauty! Adore Beauty share price soars 22%
• 3 quality ASX All Ordinaries shares that defied today’s sell-off

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Cettire Limited and REDBUBBLE FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Adore Beauty Group Limited. The Motley Fool Australia has recommended Adore Beauty Group Limited and Cettire Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It’s a good day for those invested in this ASX mining share – the company has just struck a high-grade copper zone in Chile. The Culpeo Minerals Ltd (ASX: CPO) share price is leaping higher on the back of the find.

At the time of writing, the company’s stock is swapping hands for 31 cents apiece. That’s 93.75% higher than it was at Friday’s close.

The Culpeo Minerals share price has settled after reaching an intraday high of 34 cents, representing a 112.5% gain.

Let’s take a look at today’s news from the Chile-focused copper explorer and developer.

ASX mining share surges on its best copper find to date

The share price of ASX miner Culpeo Minerals is taking off on the back of assay results from the company’s Lana Corina Copper Project.

The company’s third drill hole at the project has identified a wide high-grade zone of copper mineralisation.

It intersected 173 metres at 1.05% copper and 50 parts per million of molybdenum – a record for the company’s work at the project.

The results also confirmed the mineralisation continues at depth.

Culpeo Minerals also identified a high-grade molybdenum zone. Assays for the zone recorded 85 metres at 1,367 parts per million molybdenum and 0.07% copper.

Culpeo Minerals managing director Max Tuesley commented on the news driving the company’s share price on the ASX:

The intersection of 173 metres of copper mineralisation at a grade of 1.05% [copper] is the highest-grade intercept to date from the ongoing drilling program.

Additionally, adjacent to this high-grade copper mineralisation we are seeing significantly elevated molybdenum that likely indicates the presence of a deeper mineralised source, associated with the dioritic intrusives that host the breccia system and adds significant exploration potential.

The company signed an agreement for the right to acquire up to 80% of the Lana Corina project in March.

The company’s previous drill holes from the project returned assays including:

• 104 metres at 0.74% copper, 73 parts per million molybdenum from 155 metres, and
• 257 metres at 0.95% copper, 81 parts per million molybdenum from 170 metres

The post Guess which ASX mining share just rocketed 100% on a record find appeared first on The Motley Fool Australia.

More reading

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• 3 ASX 200 shares trading ex-dividend today
• Galileo share price dips 7% despite project milestone
• What to expect from the RBA interest rate decision this week

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Megaport Ltd (ASX: MP1) share price has struggled in the past month, but could it go higher?

Megaport shares are currently trading at $6.31, a 3.37% fall. For perspective, the S&P/ASX 200 Index (ASX: XJO) is 0.34% in the red today.

Let’s check the outlook for Megaport.

Could the Megaport share price recover?

Megaport shares have plummeted 26% in the last month but one global investment firm is predicting a turnaround.

Megaport is a a global connectivity company with more than 700 data centres around the world.

Analysts at Goldman Sachs have rated the Megaport share price as a buy and have placed a $13.10 price target on the company’s shares. This represents a 107% upside on the current share price.

The company is tipped to expand rapidly in the future as public cloud adoption and multi-cloud usage increase. Goldman sees Networking as a Service (NaaS) as a key driver of the company’s growth in the future.

The broker sees these factors could create a $129 billion per year market opportunity for the company overall.

Megaport reported $27.9 million in revenue in the third quarter of FY22, a 5% or $1.4 million boost on the previous quarter. The company also reported it had $88.8 million of cash available.

Megaport sold 1577 new services in the quarter, up 6% on the previous quarter, to take total services to 25,936. More uptake of multi-cloud connections via the Megaport Cloud Router and Megaport Virtual Edge products contributed to this growth.

Share price snapshot

The Megaport share price has descended 58% in the past year, while it has fallen 66% in the year to date.

For perspective, the ASX 200 has shed more than 1% in the past year.

Megaport has a market capitalisation of $987 million based on its current share price.

The post Goldman Sachs says beaten-up Megaport share price has 100% upside appeared first on The Motley Fool Australia.

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• Experts name 2 beaten down ASX growth shares to buy after the market meltdown

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended MEGAPORT FPO. The Motley Fool Australia has recommended MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The best performer on the ASX 200 on Monday has been the Tabcorp Holdings Limited (ASX: TAH) share price.

In afternoon trade, the gambling company’s shares are up 5% to 98.5 cents.

This compares favourably to a 0.4% decline by the ASX 200 index.

Why is the Tabcorp share price charging higher?

Investors have been bidding the Tabcorp share price higher today following the release of an announcement.

In 2019, the racing body commenced legal proceedings against Tabcorp in relation to disputes concerning the calculation of fees payable by Tabcorp following the introduction of point of consumption tax (POCT) in Queensland in 2018.

According to today’s release, Tabcorp and Racing Queensland have entered into an agreement to settle the legal proceedings. This agreement will see Tabcorp pay Racing Queensland and the Queensland Government a combined total amount of $150 million (excluding GST).

Tabcorp has prepared for this by previously disclosing a contingent liability of $75 million post tax and $108 million pre-tax.

Queensland wagering industry reforms

The aforementioned settlement remains conditional upon the commencement of legislation that will implement proposed reforms by the Queensland Government.

These proposed reforms relate to the wagering taxation and racing industry funding model and include an increase to the POCT rate to 20%, payable by wagering operators.

Upon these reforms taking effect, key industry agreements with Racing Queensland will terminate, resulting in a level playing field and Tabcorp paying wagering taxes and racing product fees on the same basis as other wagering operators.

This is a bigger positive for the company than it might first seem and explains why the Tabcorp share price is charging higher today.

Tabcorp’s Managing Director and CEO, Adam Rytenskild, was very pleased with the news. He explained:

Online betting has changed the market substantially since TAB’s licences were issued. On a relative basis, TAB currently pays double the fees to the local racing industries compared to other wagering operators. Going forward we will all pay the same in Queensland. I commend the Queensland Government for delivering fair and much needed reforms that bring the wagering market into line with the modern economy.

The post Why is the Tabcorp share price racing higher today? appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Magellan smashed, Liontown signs Tesla deal
• Appen and PolyNovo tumble after being kicked out of the ASX 200 along with these shares
• 3 ASX All Ordinaries shares defying the sell-off to surge higher
• These were the worst performing ASX 200 shares in May
• What’s dragging on the Tabcorp share price today?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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A number of popular ASX 200 shares are falling today despite no news coming from the companies.

As we move through the month of June, we’ll see a number of ASX shares trading ex-dividend.

The ex-dividend date is when investors must have purchased a company’s shares beforehand to be eligible for its upcoming dividend. If an investor buys the shares on or after this date, the dividend will go to the seller.

Below, we take a look at the list of shares that are trading ex-dividend today.

Incitec Pivot Ltd (ASX: IPL) shares are down 2.71% to $3.59 after trading ex-dividend today.

The fertiliser and commercial explosives manufacturer recorded a robust half-year result last month.

As such, the board declared a fully-franked interim dividend of 10 cents per share. This will be paid to eligible shareholders on 5 July.

Champion Iron Ltd (ASX: CIA) shares are also going ex-dividend on Monday, hovering 2.42% lower to $7.65.

The Canadian miner released its full-year results in late May, delivering solid revenue and earnings growth.

The board announced an unfranked final dividend of C$0.10 (A$0.11) per share. But you will have to wait until 28 June for your payout if eligible.

ALS Ltd (ASX: ALQ) shares are also trading without the rights to the company’s partially-franked final dividend.

At the time of writing, the company’s share price is $12.59, down 1.64%.

The testing services company dropped its full-year results on 25 May, with the board declaring a 17 cent per share dividend.

Shareholders will be paid this dividend on 4 July.

The post 3 ASX 200 shares trading ex-dividend today appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Galileo Mining Ltd (ASX: GAL) share price is heading south on Monday despite the company’s drilling announcement.

It appears the broader All Ordinaries Index (ASX: XAO) is weighing down investor sentiment today with a 0.41% loss. This comes after Wall Street recorded heavy falls late last week.

At the time of writing, Galileo shares are down 7.87% to $1.64.

Galileo commences exploration activities

Investors are driving down the Galileo share price regardless of the news that the company has started drilling operations.

According to its release, Galileo advised that reverse circulation drilling is underway at its Callisto discovery. The site is located in the Norseman Project area in Western Australia.

The company plans to drill 20 holes for a depth of around 200 metres to target the sulphide zone.

In total, the 4,000-metre program is scheduled to run for approximately five weeks.

The miner expects to test priority targets as a follow up to the recent palladium-platinum-gold-nickel-copper-rhodium sulphide intersections.

The drilling results, along with the laboratory assays, will be provided from late July 2022.

Galileo managing director Brad Underwood touched on the company’s drilling program:

It is great to be back drilling at Callisto so soon after the release of results from the first drill program in May.

The current drilling aims to expand on the early results with drilling designed at a 50-metre spacing across strike to be followed by drill lines along strike to the north.

The mineralisation intersected to date contains palladium, platinum, gold, copper, nickel, and rhodium, and the grades appear to be increasing towards the eastern target zone.

Galileo share price summary

The past couple of months have seen Galileo shares rocket from around the 20 cent mark to $1.72.

The company’s share price reached a 52-week high of $1.95 last month.

Year to date Galileo shares are up an impressive 660%.

Galileo has a market capitalisation of roughly $318 million, with 178.8 million shares on its registry.

The post Galileo share price dips 7% despite project milestone appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Reserve Bank of Australia (RBA) meets tomorrow for its monthly interest rate decision.

Last month, as you’ll recall, the RBA opted to raise the official cash rate for the first time in a decade. The benchmark interest rate was lifted from the historic low of 0.10% to the current 0.35%.

While the 0.25% hike fell in the middle of consensus expectations, the S&P/ASX 200 Index (ASX: XJO) still fell 0.4% on the day.

Why are rates going up?

Do you remember that ‘stubbornly missing’ inflation central banks were desperately trying to stoke? Or even the occasional fearful murmurings of, gasp, deflation? How about negative interest rates?

Astoundingly, all of those were still on the cards just a year ago.

But no more.

Inflation figures in Australia hit 5.1% in the first quarter of 2022, well above the RBA’s target range of 2% to 3%. And according to new Federal Treasurer Jim Chalmers, inflation is likely to move higher from here, putting pressure on the RBA for further interest rate hikes.

According to Chalmers (quoted by The Daily Telegraph):

It’s now really clear that the inflation challenge that Australians are facing is worse. People should anticipate that it will be higher than it is now. Significantly higher… This is the defining challenge in the economy. Not easily fixed, not easily addressed. But a challenge, which is even more substantial than my predecessors ’fessed up to.

What’s the RBA interest rate decision likely to be?

You’ll be hard-pressed to find any analysts predicting the RBA will hold off on a second consecutive monthly interest rate hike.

But how high can ASX investors expect the central bank to go?

According to market analyst at City Index Tony Sycamore:

The main uncertainty is whether the RBA lift the cash rate by 25bp to 0.60% as it did in May. Or a 40bp increase to 0.75%, back to where the cash rate was pre the COVID-19 pandemic and to realign with the 25bp increments it has historically moved the cash rate by.

Sycamore explained that ASX investors and analysts alike remain uncertain of the RBA’s upcoming move, largely because almost no one got the last 0.25% interest rate hike call correct.

A Bloomberg survey of 30 economists held before May’s RBA meeting revealed five economists thought the bank would hold off on raising the rate; 20 thought the RBA would boost the cash rate by 0.15%; and the other five forecast a 0.40% rate hike.

With the cash rate historically pegged in quarter percentiles, none of the 30 economists had predicted the 0.25% increase, which lifted the cash rate to an odd 0.35%.

As for tomorrow, the majority of economists are forecasting a 0.25% interest rate boost from the RBA while most of the rest believe we’ll see a 0.40% increase. This would bring rates back in line with the quarter percentile mark, at 0.75%. Goldman Sachs is the standout, with a hawkish forecast of a 0.50% rate hike tomorrow.

“Elsewhere the interest rate market is priced for 36bps of rate hikes next week and for the cash rate to reach 2.50% by year-end,” Sycamore said.

Noting that “the minutes from the May meeting showed the Board discussed three options, including a 40bp hike”, Sycamore concluded:

Considering all of the above, a 40bp rate hike is most likely on Tuesday that will take the cash rate to 0.75%. The RBA are then expected to deliver another 75bp of hikes (25bp each in July, August and November), taking the cash rate to 1.5% by year-end.

The post What to expect from the RBA interest rate decision this week appeared first on The Motley Fool Australia.

More reading

• ASX 200 midday update: Magellan smashed, Liontown signs Tesla deal
• Could the Core Lithium share price be set to take off again in June?
• Appen and PolyNovo tumble after being kicked out of the ASX 200 along with these shares
• Brainchip shares could get a massive boost this month: here’s how
• 2 ASX shares just had a shocker but are awesome long-term buys: fund

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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At lunch on Monday, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a decline. The benchmark index is currently down 0.3% to 7,215 points.

Here’s what is happening on the ASX 200 today

Magellan shares smashed

The Magellan Financial Group Ltd (ASX: MFG) share price has crashed to a multi-year low on Monday. Investors have been selling this fund manager’s shares for a couple of reasons. The first is the release of an update which revealed another sizeable decline in funds under management. The other is news that S&P Dow Jones Indices has dumped Magellan from the illustrious ASX 100 index.

Appen continues to slide

The Appen Ltd (ASX: APX) share price has taken a tumble on Monday. Investors have been selling the artificial intelligence data services company’s shares amid weakness in the tech sector and news that it will be kicked out of the ASX 200 index at the next rebalance. PolyNovo Ltd (ASX: PNV), which is also exiting the ASX 200 index, is falling on the news as well.

Lithium updates

Allkem Ltd (ASX: AKE) and Liontown Resources Limited (ASX: LTR) shares are dropping on Monday despite the release of updates. Liontown has announced a binding offtake agreement with Tesla for almost a third of its planned lithium production. Whereas Allkem has revealed stronger than expected pricing for its lithium carbonate during the current quarter but weaker spodumene production guidance.

Best and worst ASX 200 performers

The best performer on the ASX 200 on Monday has been the Tabcorp Holdings Limited (ASX: TAH) share price with a 3.5% gain. This morning the gambling company revealed that it has reached a conditional settlement of litigation with Racing Queensland. Going the other way, the Magellan share price is the worst performer with a 13% decline.

The post ASX 200 midday update: Magellan smashed, Liontown signs Tesla deal appeared first on The Motley Fool Australia.

More reading

• Could the Core Lithium share price be set to take off again in June?
• Why is the Magellan share price tumbling 10% on Monday?
• Appen and PolyNovo tumble after being kicked out of the ASX 200 along with these shares
• Liontown share price drops despite Tesla deal
• Allkem share price falls on mixed lithium update

Motley Fool contributor James Mickleboro has positions in Allkem Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Appen Ltd and POLYNOVO FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Core Lithium Ltd (ASX: CXO) share price may be on the back foot this morning but there are hopes that this month will be a good one for the ASX miner.

The signs are looking a little more promising after the recent big fall in the company’s shares. Not only have some experts come out to reassure the market on the outlook of the sector, but the Core Lithium share price has just been added to the S&P/ASX 200 Index (ASX: XJO).

The news isn’t helping the Core Lithium share price this morning though. At the time of writing, it’s slipped 2.88% to $1.18.

Core Lithium share price could find near-term support

History has shown that ASX shares added to a major index tend to outperform in the months following their inclusion.

Meanwhile, reassurances from experts about lithium demand and prices have helped the Core Lithium share price rebound around 7% this month, although it’s still down 27% from its 4 April 2022 peak of $1.60.

Demand and prices moving in favour of Core Lithium’s share price

Sentiment towards the sector appears to have improved. A number of analysts and industry insiders have rebuffed last week’s warning from Goldman Sachs that lithium prices have peaked for now and will decline sharply.

The incoming chief executive of Pilbara Minerals Ltd (ASX: PLS), Dale Henderson, said Goldman is wrong. He pointed to strong ongoing demand from customers and high prices achieved at recent auctions for the metal to refute the bearish outlook.

While that’s probably what you might expect the CEO of a lithium miner to say, other brokers are decidedly more upbeat on the commodity.

Big upside for ASX lithium shares

For instance, the analysts at Macquarie Group Ltd (ASX: MQG) are supporters of the sector. They don’t cover Core Lithium, but they rate all other ASX lithium-exposed miners in their coverage universe as “outperform”.

The broker even went as far as to say it sees “material valuation upside” for the ASX lithium shares it covers.

Supply response could be slower than you’d think

One reason for the broker’s upbeat outlook relates to its view on the risks of increased supply of the commodity. As the saying goes for commodities – nothing cures high prices like high prices.

The surge in lithium prices should see more producers entering the market, but Macquarie thinks this is easier said than done.

For instance, Chinese lepidolite suppliers could struggle to add much new supply. Lepidolite is more complex to process and new extraction technologies are controlled by four major producers.

Meanwhile, added supply from Africa could take longer to bring online than the market is anticipating, added Macquarie.

Despite today’s dip, the Core Lithium share price has gained around 350% in the past year.

The post Could the Core Lithium share price be set to take off again in June? appeared first on The Motley Fool Australia.

More reading

• Appen and PolyNovo tumble after being kicked out of the ASX 200 along with these shares
• Brainchip shares could get a massive boost this month: here’s how
• 2 ASX shares just had a shocker but are awesome long-term buys: fund
• 5 things to watch on the ASX 200 on Monday
• These were the worst performing ASX 200 shares last week

Motley Fool contributor Brendon Lau has positions in Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

When investors think of stocks Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) owns, they probably think of value-focused investing. For the most part, they’d be right. Berkshire’s top holdings are Apple (39%, a value play in 2016 when he first bought the stock), Bank of America (11%), Chevron (8%), and American Express (7%). However, there’s at least one stock in the Berkshire that doesn’t fall under this umbrella and it excites me the most.

Snowflake (NYSE: SNOW) is a fast-growing tech company that Berkshire Hathaway purchased as pre-IPO shares. Even though the investment only makes up 0.2% of Berkshire’s portfolio, Berkshire still has a nearly 2% stake in the company. Why would Buffett take a position in Snowflake when it doesn’t fit his investing style? Just like me, Buffett sees vast potential in Snowflake.

Snowflake’s product is beloved by its customers

Snowflake is a data cloud company that allows its customers to harness the power of the data that businesses generate. It offers solutions to store the data, process it, and utilize the information to drive modeling and other applications.

Because Snowflake is platform agnostic, customers can utilize any major cloud computing providers (Amazon‘s AWS, Alphabet‘s Google Cloud, Microsoft’s Azure, and others), allowing them to spread data over multiple platforms. This diversification prevents clients from being locked into unreasonable contracts and allows customers to utilize each cloud platform’s strong points.

Another attractive feature of Snowflake is its pay-as-you-go pricing. Customers can turn off Snowflake’s computational power at will and pay for the exact amount of data storage they need. Of course, this model has its risks, as an economic downturn may cause clients to reduce their spending. However, with how engrained Snowflake’s platform is in harvesting and processing data, many users are locked into using Snowflake in good times and bad.

Furthermore, customers love Snowflake. It reported a 100% Dresner customer satisfaction score for the fifth-straight year and sported a net promoter score (NPS) of 68 (for reference, Apple’s is 54). The NPS measures how much a company is promoted by its customers by surveying 100 customers on a 0 to 10 scale. On the scale are three categories of people: promoters (score 9-10, +1 to NPS), passives (score 7-8, 0 to NPS), and detractors (score 0-6, -1 NPS). The scores are added to find the final NPS. Anything over 50 is excellent, and 80 is world-class.

With Snowflake’s score of 68, it’s clear its customers are active promoters. But while the company provides a fantastic and necessary product, how are the financials?

Strong growth but weak profitability

Snowflake’s growth is nothing short of impressive. For the first quarter of the fiscal year 2023 (ended April 30, 2022), quarterly revenue was up 84% year over year to $394 million with a gross margin of 72%. Because of its usage-based model, Snowflake’s retention rate was an incredible 174%, which means customers spent $1.74 for every $1 spent in last year’s quarter.  

Another exciting development for Snowflake is its large customers (those that spend more than $1 million annually with Snowflake). These rose 98% year over year to 206. Snowflake’s total customers also grew 40% year over year to 6,322. However, it still has a large market to penetrate, as only 506 of the Forbes Global 2000 are Snowflake customers.

Snowflake has one thorn in its side: unprofitability. Snowflake’s operating margin was an abysmal negative 45%. If stock-based compensation is backed out, Snowflake is barely profitable.

Investors shouldn’t overlook Snowflake’s heavy stock-based compensation bill because the share count rose nearly 8% year over year. This rise dilutes shareholders in a similar manner that inflation affects consumers. However, stock-based compensation is a non-cash expense, meaning the business is free cash flow (FCF) positive.

Sporting an impressive 41% FCF margin means Snowflake turned 41% of revenue into cash on the balance sheet during the quarter. This transformation is vital when heading into a potential recession, as Snowflake can survive without external funding.

Like other tech stocks, Snowflake’s stock valuation has come tumbling down over the past few months. Once north of 100 times sales (it’s hard to justify a valuation that high for any company), it now trades for around 27 times sales. While this isn’t cheap, it’s not a terrible price for a rapidly growing FCF-positive company.

Despite the stock’s near 70% price tumble from its all-time high, Buffett is still invested in this revolutionary tech company. While he hasn’t added to his position, it wouldn’t surprise me if Berkshire makes a small addition sometime soon. If Snowflake can control its stock-based compensation and work toward profitability, this stock could provide outstanding performance in a portfolio over the next decade.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post My top Warren Buffett stock to buy right now appeared first on The Motley Fool Australia.

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. American Express is an advertising partner of The Ascent, a Motley Fool company. Keithen Drury has positions in Alphabet (C shares) and Snowflake Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet (A shares), Alphabet (C shares), Apple, Berkshire Hathaway (B shares), Microsoft, and Snowflake Inc. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway (B shares), long March 2023 $120 calls on Apple, short January 2023 $200 puts on Berkshire Hathaway (B shares), short January 2023 $265 calls on Berkshire Hathaway (B shares), and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Apple, and Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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