Shares of Snowflake Inc. more than doubled on their first day of trading Wednesday (Sept. 16) as banks and investors embrace cloud-based payment solutions amid COVID-19.
Snowflake closed at $253.93 on the New York Stock Exchange, up 111.6 percent from the $120 that the company's initial public offering had been priced at. The stock even traded as high as $319 earlier in the session before partly pulling back.
At those prices, the cloud-based data-warehousing start-up debuted as the biggest tech IPO of the year and most successful software IPO ever, closing the session with a $70.4 billion valuation. Wednesday’s splash put the company's value as nearly six times the $12.4 billion value it reached in a private funding round in February.
The Motley Fool said that San Mateo, Calif.-based Snowflake’s founders foresaw the coming shift to the cloud, which explains why they were the first to build a data warehouse platform optimized for cloud computing. Snowflake has capitalized on the demand for cloud-based analytics by optimizing its technology. The key, the Motley Fool said, is that it is easy to use and does not require maintenance. Companies can take their massive quantities and diverse types of data and place it all on one secure, easy-to-use platform.
Instant payments are quickly becoming the norm for banks: 77 percent of merchants expect that payment cards will be replaced by instant payments, and digital payments are predicted to reach $4.4 billion this year.
The firm may have been helped by news that Warren Buffett's Berkshire Hathaway plans to invest more than $570 million in the cloud-data company. The plan called for Berkshire to buy $250 million in shares directly from the company at the time of its IPO. Berkshire would also buy another block of shares, worth more than $320 million, from one of the company’s investors.
The target valuation points to the high expectations for the company, whose technology aims to handle large volumes of data. But the Wall Street Journal reported that Snowflake CEO Frank Slootman successfully steered ServiceNow Inc. and data-solutions company Data Domain Inc. through IPOs when he served as CEO of each.
Snowflake said at the end of July that it had more than 3,000 customers. From Feb. 1 through July 31, the company posted a loss of $171.3 million and revenue of $242 million, which more than doubled from the year-ago period. Its loss for the fiscal year that ended Jan. 31 nearly doubled to $348.5 million from the previous year, though revenue almost tripled to $264.7 million.
(This article has been updated.)