Snowflake Faces Class Action Over 6.3% Consumption Drag, Shares Plunge 18%
Snowflake shareholders filed a class action claiming management concealed a 6.2%-6.3% revenue drag from product efficiency gains and an Iceberg Table migration that could undermine its $10B 2029 revenue target. The lawsuit coincided with an 18.14% single-day stock decline and sets an April 27 lead plaintiff deadline.
1. Lawsuit Filing Details
A class action was filed on behalf of Snowflake investors who purchased shares between June 27, 2023 and February 28, 2024, alleging that management failed to disclose material revenue headwinds. Plaintiffs claim the company’s public statements misrepresented consumption trends while concealing vulnerabilities in its business model.
2. Alleged Revenue Headwinds
The complaint identifies three converging factors: product efficiency improvements reducing credit consumption by 6.2%-6.3%, adoption of open-source Iceberg Tables shifting storage outside Snowflake’s platform, and a tiered pricing structure compressing storage revenue from large accounts, which represents roughly 10%-11% of total revenue.
3. Financial Impact
Shares dropped $41.72, or 18.14%, in a single trading session following disclosure of the suit’s allegations. Jobs running on the platform grew 62% year-over-year while revenue rose only 33%, highlighting a widening gap between usage growth and top-line performance.
4. Next Steps for Plaintiffs
Investors wishing to participate must file for lead plaintiff status by April 27. The suit seeks to recover losses tied to alleged misrepresentations about Snowflake’s consumption-based revenue model and its impact on long-term targets.