Snowflake is a technology company that develops database architecture, data warehouses, query optimization, and parallelization options. The company came public yesterday and the stock doubled from the IPO price.
Snowflake, a firm we would guess many investors have never heard of, is now worth more than household names including Colgate, Deere, and TJX Stores (TJ Maxx and Marshalls). As of its closing value yesterday, Snowflake can be purchased for a mere 175X trailing 12-month sales!
Despite a modest correction in technology shares this month, exuberance toward tech, cloud, and electric vehicle stocks continues to look reminiscent of the dotcom era exuberance in internet stocks.
How does one escape the collateral damage that is likely to come when the exuberance turns to despair? Insist on dividends today and dividends tomorrow.
The WSJ has more on the Snowflake IPO.
What happens when you combine a legitimately compelling business with scarcity value, FOMO and a market untethered to seemingly pedestrian concerns like valuation? The answer: Snowflake.
Or, more specifically— Snowflake Inc.’s SNOW -8.99% initial public offering. The listing that went live Wednesday was truly one for the books. After raising the high end of its price range by 31% in less than a week, Snowflake added another 9% before getting the offering out the door. The final listing price of $120 left a lot of money on the table anyway. The shares opened at $245 on Wednesday and closed the day up another 4% from that point.
That leaves the cash-burning, data-warehousing startup valued at just over $70 billion. It fetches a sharp premium to most of the more established (and slower growing) companies on the S&P 500 Software & Services Group. It is also above most of Snowflake’s other richly valued cloud software peers, who are no slouches themselves when it comes to valuations. In fact, Snowflake would now rank as the seventh most valued company on the BVP Nasdaq Emerging Cloud Index—above names like Square and Workday.
That sets a very high bar for the company, despite the fact that it has been doing very well to this point. Snowflake was formed in 2008 to provide cloud-based software used for managing relational databases. Such data warehousing software allows enterprises to rapidly analyze business information faster than traditional database software tools can. Snowflake provides the added benefit of working across the three major public cloud platforms run by Amazon, Microsoft and Google. Those three also sell competing data warehousing services, but Snowflake’s platform-agnostic approach is well-suited to a world in which large companies use multiple cloud services.
Read more here.