Robbins LLP Files Securities Fraud Class Action Lawsuit Against Snowflake Inc. (SNOW) on Behalf of Shareholders
Shareholder rights law firm Robbins LLP announces that it filed a class action lawsuit on February 29, 2024, in the U.S. District Court for the Northern District of California (the “Court”) on behalf of all persons who purchased or otherwise acquired Snowflake Inc. (“Snowflake”) (NYSE: SNOW) Class A stock between September 16, 2020 and March 2, 2022 (the “Class Period”). The complaint alleges violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and U.S. Securities and Exchange Commission Rule 10b-5, promulgated thereunder. The complaint seeks relief on behalf of the named plaintiff and all other similarly situated holders of Snowflake during the Class Period. The named plaintiff is represented by Robbins LLP.
The Allegations
Snowflake is a cloud data platform that enables its enterprise customers to consolidate data into a single source to build data-driven applications and share data. Snowflake’s platform purportedly enables customers to store data that can be accessed and shared by multiple users, and its data cloud enables data storage, processing, and analytic capabilities.
The Snowflake class action lawsuit alleges that during the Class Period defendants made false and/or misleading statements and/or failed to disclose that: (i) Snowflake had systematically oversold capacity to customers which created a misleading appearance of the demand for Snowflake’s products and services; (ii) Snowflake had provided significant discounts to its customers prior to its initial public offering (“IPO”) that temporarily boosted sales but would not be sustainable after the IPO and/or necessitate platform efficiency adjustments that negatively impacted client consumption and Snowflake’s revenue and profit margins; (iii) as a result, Snowflake’s customers were poised to roll over a material amount of unused credits (and thereby cannibalize future sales) at the end of their contracts’ terms or to refuse to renew their contracts at prior consumption levels or at all; and (iv) consequently, Snowflake’s product revenue and remaining performance obligations had been artificially inflated leading up to and during the Class Period.
On March 2, 2022, Snowflake revealed that its product revenue growth rate for fiscal 2023 was projected to be slashed to a range of 65% to 67%, far below the triple-digit growth and purportedly ongoing favorable business trends highlighted by defendants during the Class Period. On a related earnings call also held on March 2, 2022, Snowflake CFO, defendant Michael P. Scarpelli, further revealed that Snowflake customers were consuming at a reduced rate, which he blamed on “platform enhancements . . . which lowered credit consumption.” On this news, the price of Snowflake Class A common stock fell nearly 28% over several trading sessions, damaging investors.
Next Steps: If you purchased or otherwise acquired Snowflake Inc. Class A stock between September 16, 2020 and March 2, 2022, and wish to serve as lead plaintiff, you have up to April 29, 2024, to ask the court to appoint you as the lead plaintiff for the class.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact attorney Aaron Dumas, Jr. of Robbins LLP at (800) 350-6003, via email, or through our shareholder information form. Any member of the class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. A copy of the complaint can be found here.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
