Snowflake Inc.’s record initial public offering gives the company a jaw-dropping valuation that makes other foamy tech names look cheap by comparison.
it was up 111.6% in Wednesday’s session after the company produced its largest software IPO on record. The stock’s big rally, which occurred after Snowflake priced its offer above an already high range, left the company with a market value of around $ 70 billion, more than five times the private market valuation of $ 12.4 billion reached in February.
According to Dealogic data dating back to 1995, the company became the largest in terms of market value to ever double on its first day of trading.
Snowflake IPO: 5 things to know about the Berkshire-backed company after its record software offering
Investors flocked to Snowflake stock in a hot time for initial public offerings, giving the company a rich valuation even by the standards of top tech names. Snowflake has generated $ 403 million in revenue in the past four quarters by offering database software for the cloud, leaving it with a market cap to sales ratio of approximately 175 times.
Snowflake’s first day pop makes it the most expensive tech name with that metric, based on a data analysis from FactSet that looked at companies with over $ 400 million in annual revenue.
Zoom Video Communications Inc.
it held the crown for the most expensive tech stock by many metrics, but its market value to sales ratio over the past four quarters is only half that of Snowflake, at around 87 times. Zscaler Inc.
another hot cloud software name, it has a valuation of around 39 times its sales.
According to independent technology investment analyst Beth Kindig, Snowflake opened at 98 times its business value compared to its estimated revenue for the next 12 months. FactSet does not yet provide forecast revenue estimates for Snowflake.
This compares with 31 times for Zoom on its opening day and 23 times for CrowdStrike Inc.
when the cybersecurity company made its market debut, Kindig said. Both companies peaked just over 40 times in the first few months of trading.
Snowflake sold 28 million shares to raise $ 3.36 billion through its offering and Berkshire Hathaway Inc.
and Salesforce.com Inc.
each agreed to purchase $ 250 million of shares at the IPO price simultaneously, pushing the total to $ 3.86 billion. Underwriters have the option to purchase 4.2 million more shares, which could bring the amount Snowflake eventually raises up to $ 4.4 billion.
“The focus around Snowflake’s IPO is a prime example of how accelerated adoption of cloud computing is making companies involved in the space more valuable, especially those that make virtualization easier to navigate,” wrote Andrew Little. , a thematic research analyst at Global X who focuses on the cloud.
In what is shaping up to be the busiest week for initial public offerings since Uber Technologies Inc. made its debut in May 2019, Israeli software company JFrog Ltd.
joined Snowflake with its commercial debut Wednesday. The US-listed shares of JFrog, which produces developer software, ended the session with a 47% rise.
Read: Sizzling IPO Market Makes Snowflake and JFrog Soar, With More Software Companies On the Way
Snowflake’s IPO came as the Renaissance IPO ETF
it increased by 59% over the year and like the S&P 500
it earned about 5%.