Snowflake's record-breaking market debut, making it the largest software IPO ever

Snowflake: Founded in 2012, Snowflake offers a cloud-based data storage and analytics service, generally termed "data warehouse-as-a-service". It allows corporate users to store and analyze data using cloud-based hardware and software.

The IPO: Today (Wednesday 16 Sep), Snowflake went public via an IPO on the New York Stock Exchange, selling 28 million shares and raising almost $3.4bn. Snowflake's market debut easily tops the 2007 VMWare IPO (raising $957m) to become the largest software IPO on record.

Earlier in the month, the originally expected price range ran between $75 to $85 a share but was later revised to $100–$110. Even this was well below the actual listing price of $120 a share. Snowflake's shares soared to $245 on market open and at one point reached $315, jumping more than 160%. However, shares pulled back a little and ended the day at $253.93, almost a 112% gain.

Just a few months prior in June, the Financial Times reported that Snowflake had aims of a $15bn – $20bn valuation. However, Snowflake's market value climbed to almost $90bn today during its debut listing, clearly exceeding its prior expectations.

However: there is strong scepticism surrounding Snowflake's valuation, so it will be interesting to see how the stock performs over the coming weeks.

"They have a lot to offer and there’s a lot to like in the platform, but those multiples seem a little bit over the top for me" – Adam Ronthal, research VP at Gartner

While Snowflake's revenues have jumped 121% in their recent quarterly report with high net retention figures (relates to customer loyalty measures), they also recorded a net loss of during the period and during its last fiscal year.

The reason behind increased revenues: The pandemic. The sudden and unexpected transition towards remote working has unveiled a strong demand for cloud software companies, like Snowflake.

Snowflake's current stock price:

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Big week for IPOs: JFrog, another software tools developer, also listed today and did well, rising nearly 50% from the listing price. Snowflake is just one of 12 companies to list via an Initial Public Offering on US stock exchanges this week, making it the busiest week for IPOs since May 2019. Further, on a year-to-date basis, Refinitiv reports that the amount raised from listings in 2020 has reached the highest levels since 2014, the same year Alibaba had their record $25bn flotation.

More to come: Snowflake is just one of several "unicorn" startups that are expected to go public before the end of the year. Others include DoorDash, Airbnb and Palantir.