Snowflake (SNOW) shares soared over 130% during their first minutes of trading on Wednesday. The stock opened at $245 a share. That’s more than double its IPO price of $120.
The cloud-data company sold 28 million shares, raising about $3.36 billion, the largest initial public offering of a software company.
This was also the biggest IPO of the year, apart from the SPAC backed by billionaire Bill Ackman’s Pershing Square’s Tontine Holdings, which raised $4 billion earlier this year.
The cloud industry has been on an hot trajectory garnering increasing enthusiasm.
Snowflake’s debut received a further profile boost after it was disclosed in filings last week that Warren Buffett’s Berkshire Hathaway (BRK-A, BRK-B) would invest $250 million at the IPO price. Additionally it would also buy 4 million shares which belong to Snowflake’s former CEO Bob Muglia.
The filing also showed Salesforce Ventures, the VC arm of Salesforce (CRM) would also be buying $250 million shares of the cloud-based data platform in a private placement following its public debut.
For the fiscal year ending January 31, 2020, Snowflake’s revenue grew 174% year-over-year. For the six months ended July 31, 2020, its revenue growth represented a y/y growth of 133%.
The stock’s performance on its first day of trading may bring into debate whether the IPO was underpriced.
The SEC recently approved a New York Stock Exchange proposal to allow companies to raise new capital in a direct listing, something it wasn’t allowed to do before. This new type of direct listing is seen as a way to avoid costly underwriting fees and underpricing.
Ines covers the U.S. stock market. Follow her on Twitter at @ines_ferre
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