Warren Buffett’s Berkshire Hathaway Earns US$800 Million On Snowflake IPO

Daniel Fowler
September 18, 2020

Shares of Snowflake surged 111% to about $253.93 U.S.in its market debut, pushing Berkshire Hathaway's stake to $1.55 billion US from around $730 million USA based on the IPO pricing of $120 USA per share.

The SEC recently approved a New York Stock Exchange proposal to allow companies to raise new capital in a direct listing, something it wasn't allowed to do before.

The offering is expected to close on Friday and with an underwriter option to purchase up to 4.2 million additional shares within the next 30 days.

Indeed, Rob Woollen, co-founder and chief technology officer of Sigma Computing Inc., who was involved in the early days of Snowflake as an entrepreneur in residence at early investor Sutter Hill Ventures, told SiliconANGLE that it's no wonder Buffett broke his rules to invest early in the company. This was above the target IPO price of $100 to $110 per share, which made many believe that the IPO would be historic for a United States tech company.

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Snowflake's first day pop, by that metric, makes an expensive technical name, which saw companies with more than $ 400 million in revenue based on FactSet's data analysis.

The cloud data platform raised a grand total of US$3.4bn by placing 28mln shares at US$120 each, for a market capitalisation of US$33bn. Snowflake has generated $ 403 million in revenue over the past four quarters by providing database software for the cloud, with a market capitalization of 175x.

Salesforce and Berkshire Hathaway will each buy $250 million in Snowflake shares in a private placement, following the launch of the IPO. Just last night developer-focused software concern JFrog and data-focused cloud operation Snowflake each priced their public debuts above raised price intervals.

Snoflaken success on the first trading day increases the hype around technology companies. The company's product is a cloud-based data storage and analysis service. "They find out they can't take advantage of cloud scale". That includes 146 of the Fortune 500 firms.

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