Snowflake Inc.’s record initial public offering gives the company an eye-popping valuation that cheapens other erroneous tech names by comparison.
Snowflake SNOW shares,
Wednesday’s session rose 111.6% after producing the largest software IPO in the company’s record. The stock’s large rally that followed the snowflake, which was already priced above the increased offer, left the company with a market value of about $ 70 billion, a private $ 12.4 billion it received in February -The market was more than five times the valuation.
Snowflake IPO: 5 things to know after the Berkshire-backed company offers record software
Investors put Snowflake in stock over a warm period for initial public offerings, giving the company a rich valuation even by the standards of high-flying tech names. Snowflake generated $ 403 million in revenue over the last four quarters by offering database software for the cloud, leaving it with a market capitalization-to-sales ratio of 175x.
Snowflake’s first day makes it an invaluable technology name by that metric, based on an analysis of Pop FactSet data that was seen with companies with more than $ 400 million in annual revenue.
Zoom Video Communications Inc. ZM,
The crown has been held by many metrics to be the most expensive tech stock, but the ratio of sales to market value for the last four quarters is just half that of Snowflake, at around 87x. Zscaler Inc. ZS,
Another hot cloud-software name, it is valued at nearly 39 times its sales.
According to independent technology investment analyst Beth Kindig, Snowflake opened at 98 times its enterprise value for estimated revenue for the next 12 months. FactSet does not yet provide forward-revenue revenue estimates for Snowflake.
This is compared to 31 times for Zoom and 23 times for Crowdstrike Inc CRWD on its opening day of trading.
When the cyber security company made its market debut, Kindig said. Both of those companies made just over 40 times their first month’s business.
Snowflake sold 28 million shares and Berkshire Hathaway Inc. to raise $ 3.36 billion through its offering. BRK.A,
And Salesforce.com Inc. CRM,
Each IPO agreed to buy $ 250 million in shares, worth $ 3.86 billion in total. Underwriters have the option to buy 4.2 million more shares, allowing Snowflake to eventually receive up to $ 4.4 billion.
“The focus around Snowflake’s IPO is a very good example of how rapid cloud-computing adoption has been, which is making companies more valuable in the space, especially those that make virtualization easier to navigate. Are, ”wrote Andrew Little, a thematic research analyst on global theory that covers the cloud. .
Uber Technologies Inc. made its debut in May 2019, with Israeli software company JFrog Ltd. This is the busiest week since FROG.
Joined Snowflake with the start of his Wednesday business. JFrog’s US-listed shares, which make software for developers, ended the session up 47%.
Read: Red-hot IPO market sent Snowflake surging and JFrog to come up with more software companies, leaping
Snowflake’s IPO came as Renaissance IPO ETF IPO,
Grew 59% on the year and as the S&P 500 SPX,
There is an increase of about 5%.