As banks and investors embrace cloud-based payment solutions amid COVID-19, shares of Snowflake Inc.’s stock began the first day of trading at $245 a share, more than double the company’s initial public offering (IPO) price. By mid-day, the stock price had reached $263.
At those prices, the cloud-based data warehousing startup debuted as the biggest tech IPO of the year with a valuation of $67.9 billion, The Wall Street Journal reported.
The Motley Fool, the financial and investment advisory company based in Virginia, said that San Mateo, California-based Snowflake’s founders foresaw the coming shift to the cloud, which explains why they were the first to build a data warehouse platform optimized for cloud computing. Snowflake has capitalized on the demand for cloud-based analytics by optimizing its technology. The key, the advisors said, is that it is easy to use and does not require maintenance. Companies can take their massive quantities and diverse types of data and place it all on one secure, easy-to-use platform.
Instant payments are quickly becoming the norm for banks: 77 percent of merchants expect that payment cards will be replaced by instant payments, and digital payments are predicted to reach $4.4 billion this year.
Snowflake priced its IPO’s 28 million shares at $120 per share on Tuesday (Sept. 15). But Wednesday’s splash put its value as nearly six times the $12.4 billion valuation it reached in a private funding round in February.
The firm may have been helped by Berkshire Hathaway’s plans to invest more than $570 million in the cloud data company. The Financial Times reported last week that Snowflake’s updated IPO filing valued the company at $23.7 billion. The plan is for Warren Buffett’s Berkshire Hathaway to buy $250 million in shares directly from the company at the time of its IPO. Also, Berkshire would buy another block of shares, worth more than $320 million, from one of the company’s investors.
The target valuation points to the high expectations for the company, whose technology aims to handle large volumes of data.
The WSJ reported that Snowflake CEO Frank Slootman successfully steered ServiceNow Inc. and data solutions company Data Domain Inc. through IPOs when he served as CEO of each.
Snowflake said at the end of July that it had more than 3,000 customers.
From Feb. 1 through July 31, the company posted a loss of $171.3 million and revenue of $242 million, which more than doubled from the year-ago period. Its loss for the fiscal year that ended Jan. 31 nearly doubled to $348.5 million from the previous year, though revenue almost tripled to $264.7 million.