As first reported by The Financial Times, the firm's updated IPO filing valued the company at $23.7bn and Berkshire Hathaway plans to buy $250m in shares directly from the company at the time of its IPO. At the same time though, Buffett's holding company will also buy another block of shares worth more than $320m from one of Snowflake's investors.
Snowflake, which calls itself “The Cloud Data Platform”, aims to change the way that businesses approach data lakes, analytics and data warehousing. The company was started back in 2012 and it already has some big name customers that use its cloud data services including Sony, Adobe, Capital One and others.
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Through its IPO, Snowflake expects to raise $3.24bn by pricing shares at $75 to $85 each. The investment and blessing by Warren Buffett will likely help increase the company's share price though.
The fact that Warren Buffett plans to invest in Snowflake is quite surprising as he rarely invests in the enterprise technology market. The last time he did so was back in November of 2011 when Berkshire Hathaway purchased a 5.4 percent stake in IBM for over $10bn. Unfortunately for Buffett, this investment didn't pay off and he ended up selling his stake in IBM in 2018 in order to make a much bigger investment in Apple.
According to IPO documents filed with the US Securities and Exchange Commission (SEC), Snowflake aims to pioneer an ecosystem in which customers and partners “can break down data silos and derive value from rapidly growing data sets in secure, governed and compliant ways”. Essentially the firm wants to help businesses get the most value from the data they already store in data lakes and warehouses.
Despite Snowflake's ambitious plans for the future, the company still operates at a loss and in this year alone, its net loss until the end of July was $171.3m while last year the firm had a net loss of $348.5m. Despite these losses, sales are growing and Snowflake's sales reached $242m during the first half of this year which is almost more than the $265m in sales it brought in last year.
Snowflake's IPO is set to take place either at the end of September or during October and we'll just have to wait and see whether Buffett's investment in the cloud computing company pays off.
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