Does anyone here hold the stock or familiar with their product?
It’s discussed heavily on Saul’s board. I’ve noted it here before. I bought some around $160 and a bit more when it fell briefly under the IPO price, $120. M* and CFRA don’t regard the current valuation as being “crazy,” if everything works out right, and they offer rationales. Is it worth $400/share, as in the recent, truly crazy days? No. But could it easily be worth north of $200? Yes.
I think they are sort of like a data consolidator — like the IBM/HP as the the system integration of IT systems.
Snow creates “data lake” and add a layer to the data products from other vendors (i.e S&P Globe), enabling end users to be able to use the data very quickly.
In a nutshell, Snowflake is a database on the cloud, optimized for data warehouse use cases, ie large data sets used for analysis. The beauty of it is that the CPU is billed on demand. Massive savings for customers as data warehouse servers are typically expensive as they are sized for peak usage, yet sit idle for much of the time. Much cheaper to just pay for your consumption.
“The beauty of it is that the CPU is billed on demand. Massive savings for customers as data warehouse servers are typically expensive as they are sized for peak usage, yet sit idle for much of the time. Much cheaper to just pay for your consumption.”
Yes, and as I understand it, this differentiates SNOW from a typical SAAS company in which you pay a fixed rate regardless of consumption.
Berkshire has lost money so far on Snowflake. Berkshire (Todd Combs) bought 2.08 million shares at the IPO price of $120/share, plus an additional 4.04 million shares in a private placement from former CEO Robert Muglia at the opening price on the day of the IPO of $245/share. The combined cost basis is $202/share versus today’s close of $159.49.
Berkshire has lost money so far on Snowflake. Berkshire (Todd Combs) bought 2.08 million shares at the IPO price of $120/share, plus an additional 4.04 million shares in a private placement from former CEO Robert Muglia at the opening price on the day of the IPO of $245/share. The combined cost basis is $202/share versus today’s close of $159.49.
When you consider the words “IPO price” and “opening on day of IPO”, it’s a bit of a mystery.
The average return in such situations is terrible, so the current situation is hardly a big surprise.
Though it is with the benefit of hindsight, I would have expected Mr Combs to have anticipated that
the shares could simply be bought on the open market at a decent price some time soon enough after listing.
Maybe Geico uses snow, so Comb has some insights, and they don’t want to miss it like they missed GOOG.
I wonder how sticky SNOW’s product is though. It’s probably very hard to switch, since all your work is built on top of it, which may be aggregating several different kind of data you need, and you are not paying that much.
But the company needs to reach certain scale to start making money, and the stock is trading like 10x revenue
When you consider the words “IPO price” and “opening on day of IPO”, it’s a bit of a mystery.
Is “IPO price” the price underwriters bought from the company selling shares? “opening price” would be the market price underwriters sold to the public. Underwriters make money from fees and the price difference.
When you consider the words “IPO price” and “opening on day of IPO”, it’s a bit of a mystery. … Is “IPO price” the price underwriters bought from the company selling shares? “opening price” would be the market price underwriters sold to the public. Underwriters make money from fees and the price difference.
Sorry, it’s not a mystery what the terms mean or why the two prices are different.
It’s a mystery to me why any sophisticated investor would buy at those prices, and even commit in advance to buying at those prices.
That’s because there is an alternative that is almost always better: buy on the open market a bit later.
“It’s a mystery to me why any sophisticated investor would buy at those prices, and even commit in advance to buying at those prices. That’s because there is an alternative that is almost always better: buy on the open market a bit later.”
Or negotiate a fixed price when the commitment is made. At the time that the commitment was made to buy at the IPO price the expected IPO price was $80/share.