Snowflake (SNOW) surpassed heightened expectations with an initial public offering that raised $3.4 billion, setting a record as the largest U.S. software deal ever. The Snowflake IPO jumped by triple digits as trading began Wednesday. The company priced 28 million shares at $120 each, above its estimated price range of $100 to $110 per share. It had initially said a price range of $75 to $85. The IPO gave Snowflake a market valuation of $33.3 billion.
Snowflake stock soared 130%, near 276.20, during afternoon trading on the stock market today.
Founded in 2012 and based in San Mateo, Calif., Snowflake is a cloud-based data-warehousing company, providing businesses with an integrated data management system. It includes support for “data engineering, data warehousing, and data science,” according to the Snowflake IPO filing.
According to Renaissance Capital, which manages two IPO-based exchange-traded funds, Snowflake is the most extensive software IPO ever, raising over three times more than runner-up VMware (VMW) in 2007.
Warren Buffett’s Investment In Snowflake IPO
Among the reasons why the Snowflake IPO is receiving plenty of attention is because Buffett’s Berkshire Hathaway (BRKB) is investing a total of $570 million in the offering.
Built into the IPO are commitments from Berkshire Hathaway and Salesforce Ventures to each buys $250 million of Class A common stock in a private placement. Salesforce Ventures is the venture capital arm of Salesforce.com (CRM).
Also, Berkshire Hathaway will buy an additional $320 million worth of shares from a stakeholder in a secondary transaction.
IPO Boutique, an IPO research, and advisory firm, had said the deal was “many multiple times oversubscribed.” That means that requests for shares far exceed what was being offered.
Snowflake IPO Gets Highest Rating
“The valuation, to traditional investors, appears to be stretched but given this company’s excellent growth profile, strong and highly-unique backers and presence in the cloud/data space, there is an exponential amount of demand for this IPO,” said IPO Boutique in a note to clients Tuesday. Moreover, it gave the Snowflake IPO it’s the highest rating of 5, on a 1-to-5 scale.
For the six months ended July 3, Snowflake reported $148.9 million, up 189% from the year-ago period. It showed a net loss of $171.3 million, vs. a loss of $177.2 million. The company reports having 3,117 customers.
Berkshire Hathaway stock edged up 0.6%, near 220.35, during morning action on the stock market today. Also, Salesforce.com climbed 1%, near 254.30.
JFrog IPO Raises $509 Million.
Snowflake is one of several high-profile companies that will make their public debut via an IPO this week. Among those getting heightened attention is JFrog (FROG). It raised $509 million, offering 11.6 million shares at $44, well above $39 to $41.
It also priced Tuesday and trades Wednesday.
JFrog’s leading product enables organizations to deliver software updates across any system continuously. Also, it provides a critical bridge between software development and deployment.