Snowflake's Shares Soar in IPO -- Update
17 September 2020 - 3:24AM
Dow Jones News
By Dave Sebastian and Corrie Driebusch
Snowflake Inc.'s shares made their debut at $245 a share on
their first day of trading, more than double the IPO price, giving
the biggest tech initial public offering of the year a valuation of
$67.9 billion and fueling the enthusiasm surrounding IPOs.
The data-warehousing company priced its IPO of 28 million shares
at $120 a share on Tuesday. Wednesday's ascent means the company is
now valued at more than five times the $12.4 billion valuation it
notched in a private funding round in February of this year.
The IPO raised roughly $3.4 billion for Snowflake, not including
the overallotment option, which allows underwriters to buy
additional shares. That total also doesn't include the concurrent
investments of $250 million apiece pledged by Berkshire Hathaway
Inc. and Salesforce Ventures LLC. The company said it plans to use
proceeds to fund its operations and potentially make
acquisitions.
Based on its IPO price, the Silicon Valley darling was valued at
roughly $33.3 billion, making it the second-largest company to go
public in 2020, according to Dealogic, after Quicken Loans parent
Rocket Cos. Investors, eager for a piece of the fast-growing
company, drove Snowflake's IPO price up from the company's original
target of $75 to $85 a share.
Frank Slootman, Snowflake's chief executive, is no stranger to
the IPO process. He successfully steered software company
ServiceNow Inc. and data-solutions company Data Domain Inc. through
IPOs when he served as CEO of each.
Hunger for growth in a low-interest-rate environment and a shift
of favor toward technology companies have helped fuel significant
demand for IPOs. Snowflake is one of the most hotly anticipated
tech offerings of the year among software and cloud-data
investors.
Companies listing in the U.S. raised more than $78 billion in
their IPOs through the end of last week, on pace for one of the
biggest money-raising years for new issues since the tech boom of
2000, according to data provider Dealogic. The IPO market was
restrained earlier this year due to the Covid-19 pandemic.
Investors, faced with interest rates near historic lows and the
Federal Reserve pouring trillions of dollars into the economy,
later sought to put their money where they can get better
returns.
Snowflake, based in San Mateo, Calif., offers businesses
cloud-based data management, and corporate customers can share data
across multiple online storage systems using the company's data
warehouse. It had more than 3,000 customers as of July 31,
according to its securities filing.
For the six months ended July 31, the company posted a loss of
$171.3 million on revenue of $242 million, which more than doubled
from the year-ago period. Its loss for the fiscal year ended Jan.
31 nearly doubled to $348.5 million from the previous year, though
revenue almost tripled to $264.7 million.
Write to Dave Sebastian at dave.sebastian@wsj.com and Corrie
Driebusch at corrie.driebusch@wsj.com
(END) Dow Jones Newswires
September 16, 2020 13:09 ET (17:09 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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