Buffett-backed Snowflake doubles value in stock market’s biggest software debut

(Reuters) – Snowflake Inc. shares on its New York Stock Exchange more than doubled a day after the Warren Buffett-backed data warehouse company raised more than $ 3 billion on this year’s largest US listing.

The company’s logo for Snowflake Inc. is displayed on a banner to commemorate the company’s IPO on September 16, 2020 in New York, US, New York Stock Exchange. REUTERS / Brendan McDermid

The start of Snowflake’s spectacular market reflects a heartfelt appetite for new shares, as a lower interest rate drives investors into equities.

The market ignored the loss of Snowflake, which is focusing on its software business prospects of sharing data on cloud systems, which has seen rapid growth as offices around the world adapt to remote work .

Shares of Snowflake started trading at $ 245 on Wednesday, more than double their IPO price of $ 120, and rose 111% to close at $ 253.93, worth more than $ 120 billion.

“It’s just one day. Snowflake Chief Executive Officer Frank Slotman said in an interview that things would return to normal and become more organized over time.

Among US-listed companies with a market capitalization of at least $ 10 billion, only three companies are now more expensive than Snowflake’s 2020 revenue. According to Refinitiv, it surpasses only Nicola Corp, Liberty Broadband and Immunomedics Inc.

Snowflake sold 28 million shares in its IPO to raise $ 3.36 billion in the largest software IPO ever.

For such a large IPO, an opening pop of this magnitude is rare. The surprise debut made CEO Slotman and CFO Mike Scarpelli billionaires, even though neither of them founded the company.

It is likely to rekindle the debate among venture capital investors, including Bill Gurley of Benchmark, who argues that investment IPOs underpin IPOs, so that their investors can make big profits when customer stocks start .

Gurali advocates that companies consider going public through a direct listing rather than through an IPO, where the initial stock price is determined by orders coming to the stock exchange.

Slotman said he had no regrets about how the company’s IPO went.

He said, “The idea that we can all sell 28 million shares at the highest price, what we have seen today is complete and futile. Markets don’t work that way, “Slotman said.

“That’s why this whole DL (Direct Listing) story and all the noise around it is incredibly misleading. What an IPO process does is find out the price at which you can transfer your entire offering. And of course this is much less than the number to which you can transfer 100 shares. “

About 36 million shares changed hands on Wednesday.

Slotman, who has previously made public two other companies, and Scorpelli were hired both to help them prepare for the Snowflake IPO last year.

Prior to the IPO, Buffett’s Berkshire Hathaway Inc. and Salesforce Ventures LLC had agreed to purchase $ 250 million worth of stock with Snowflake.

Snowflake, founded in 2012 in San Francisco, sells a cloud data platform that promises to consolidate business data on one platform.

Snowflake’s full-year revenue ended January 31. It rose 173.9% to $ 264.7 million, though its net loss nearly doubled to $ 348.54 million.

The listing comes in the midst of a surge in US capital markets following the demand for new listings, after the COVID-19 epidemic prompted many companies to discontinue plans to go public.

C. in Bengaluru. Reporting by Nivedita and Joshua Franklin in Boston; Additional reporting by Nikit Nishant; Writing by Anirban Sen and Joshua Franklin; Editing by Arun Kayur and Lincoln Feast.