Data-warehousing company – Snowflake (NYSE: SNOW) – made quite the impression on its debut. With the share price immediately doubling from US$120 to US$253.93, by market close of its first day as a publicly listed entity, the Warren Buffett-backed operation had a market cap of around US$70 billion to show for it. In the present day, momentum shows no signs of slowing.
As you may recall, Buffett’s Berkshire Hathaway acquired US$250 million worth of Snowflake stock at the IPO pricing to start with, later snapping up an additional US$485 million worth of shares which were being offloaded by former Snowflake CEO Robert Muglia. This effectively brought Berkshire’s total exposure to around US$735 million (2.2% stake).
As confirmed by Berkshire Hathaway’s third-quarter portfolio update, the company retained the original 6.1 million shares worth US$1.5 billion towards the end of September – and just mere weeks after the aforementioned debut. Given Snowflake’s climb to an impressive US$342 per share this week, the holding proudly showcased a revised total value of approximately US$2.1 billion. That’s a considerable US$1.4 billion paper gain in just over two months.
According to Trefis, Snowflake’s recent share price rally comes down to a few potential key factors. These range from the impending arrival of Snowflake’s first quarterly results as a public company with investors anticipating strong numbers; investors continuing to “double down” on both high-growth and software shares throughout the past week; as well as rising optimism across the board due to the announcement of a COVID-19 vaccine (or at least progress on that front). Of course, having the Oracle of Omaha’s seal of approval also helps a great deal.
Once again – this is a company you should probably add to your watchlist.