If you're hearing the word "snowflake" a lot today, it has nothing to do with politics. Snowflake the tech company is coming off the largest software IPO in history on Wednesday, reports CNN. The company priced its shares for the initial public offering at $120, but they opened at $245 and closed a bit higher than that, meaning the company is now valued at $70 billion. It was valued at $12 billion in February, per Business Insider. More:
- Buffett boost: One reason for the big day might be what Axios calls the "halo effect" of Warren Buffett. His Berkshire Hathaway bought about 2 million shares, the first time the company has invested in a tech IPO. The company Salesforce also bought about 2 million shares.
- What's it do? Snowflake, which launched in 2008, doesn't make widgets—it works in the cloud. CNN calls it a "cloud data warehousing" firm that "helps blue chip companies analyze and share data in the cloud." The Wall Street Journal says the software "allows enterprises to rapidly analyze business information faster than traditional database software tools can." The company has an advantage because it works on the three major public cloud platforms from Amazon, Microsoft, and Google.
- Big day: Among those who got rich, or richer, on Wednesday is venture capitalist Mike Speiser, whose company now has a stake worth $12.6 billion from an early investment of $200 million, reports CNBC. Speiser, 49, is a relatively low-profile investor, according to the story.
- Buyer beware: That's the advice in another CNBC story, which points out that 11 other IPOs popped more than 100% on their first day this year, and all have gone on to average a negative 1% return from the opening-day close. The Journal notes that Snowflake "has yet to make a profit and still burns cash," though it's got a lot to burn.
- Context: Snowflake is the biggest software IPO on record, but it's not in the ballpark of the biggest IPOs overall. The company raised $3.4 billion, which is dwarfed by the record $26 billion Saudi Aramco raised last year, notes CNN. Consider that Uber raised $8 billion in 2019, and that was only 25th biggest on the all-time list.
(Read more IPO