Snowflake IPO: 3 Reasons To Watch Out For SNOW
Snowflake IPO might sound like a new trendy beer but it’s possibly the most compelling Initial Public Offering coming to the stock market. These are the three top reasons tech stock SNOW is one to watch out for.
September 16, 2020 Update: Snowflake Corporation officially dropped its Initial Public Offering on September 15, and SNOW is now available for trading. In a record-breaking $3.4 billion IPO, the largest ever for a software company, this is what you need to know:
- 28-million shares were sold.
- Each share was valued at $120.
- The Snowflake Corporation raised $3.4-billion from the IPO.
Someone familiar with the corporation said that demand for shares drove the price up from original IPO estimates of $80-$100.
Continue reading to find out why SNOW is hot right now.
1. What Snowflake Corporation does is future proof
Lets keep this simple. Snowflake Corporation liberates organizations that use big data from fixed data centers via a querying service in the cloud.
What this means is that, unless big data becomes irrelevant, which it won’t, the Snowflake Corporation is future proof.
This does not mean there won’t be rivals, but right now, it’s a one-horse race. Just look at these main growth areas:
- Customers year-on-year – 101.5-percent.
- Revenue year-on-year – 133-percent.
Those are impressive numbers.
2. The company is run by super-smart people
This is no upstart, out of the blue company. It is run with purpose.
Founded in 2012 by Benoit Dagevill, Thierry Cruanes, and Marcin Zukowski. Dagevill and Cruanes worked at Oracle, a probable future rival to the Snowflake Corporation. While Zukowski was a co-founder of Vectorwise, a database management system built for high-performance analytical applications.
The founders clearly felt there was a way to do things better in the big data marketplace. And that forward thinking is reflected in their hiring of CEO’s.
In 2019, Bob Muglia was replaced by Frank Strootman. For five-years Muglia led the company’s rapid growth, and now Strootman has been lured out of retirement as the company looks for revenue. Strootman helped ServiceNow grow revenue from $75-million to $1.5-billion.
During the change of CEO, a board of directors member said: “Snowflake is one of the most significant new companies in Silicon Valley and we believe Frank (Strootman) is the right leader at this juncture to fully realize that potential. The best time to make a change is when things are going well.”
Smart and proactive.
3. Major stock market players are already investing
If you’re new to trading, the names Bekrshire Hathaway or Saleforce.com might not turn your heads. Yet, they should:
- Berkshire Hathaway is Warren Buffett’s investment holdings, and it is well-documented that he has a reluctance to buying freshly public stocks. Therefore when Berkshire Hathaway makes a $250-million investment into the Snowflake IPO, savvy investors take note.
- Saleforce.com also made a $250-million investment, but this move is less surprising as they also took positions in Zoom, Dropbox, and other tech stocks before selling. This is likely their move with the Snowflake IPO but it shows they think the price will rocket early.
Despite all the positives surrounding the future Snowflake IPO, investing in any stock is a risk. If you can’t afford to lose it, don’t do it.
One reason not to jump on the hype day one
SNOW will hit the market at a price point of around $75 to $85 per share (these were estimates at time of the original article). This will rocket day one. The safety-first investor may want to see where that settles before jumping in.
However, this might be one stock that goes up and doesn’t come down. It’s a gamble, and why the stock market is so intriguing. No one truly knows what will happen next, after the Snowflake IPO.