Warren Buffett-backed Snowflake hits $70bn value in biggest ever software IPO

Shares in cloud storage company double in first day of trading, suggesting pent up demand for tech company shares

Snowflake cloud storage on a phone
Snowflake offers businesses virtual data warehousing on demand Credit: Bloomberg

Cloud storage company Snowflake made Wall Street history as the largest ever software company debut on the stock market, with shares doubling on its first day of trading. 

Snowflake, which provides digital data warehouses on demand, notched up a valuation of $70bn (£54bn) after shares rose as high as 130pc on Wednesday, minting Frank Slootman, chief executive, Benoit Dageville, chief technology officer and Bob Muglia, former chief executive, as billionaires. 

“A stock is worth exactly what somebody wants to pay for it,” Frank Slootman, Snowflake chief executive, told CNBC just after the stock began trading. “It’s like talking about the weather, it is what it is. Tomorrow’s another day, we’ll see what it brings.” 

Warren Buffett and Marc Benioff backed the company with concurrent investments of $250m apiece at the IPO price, through Berkshire Hathaway and Salesforce Ventures. 

Snowflake says it will use the cash to to cover operations and look at possible acquisitions. 

Warren Buffett, chairman of Berkshire Hathaway, has backed the cloud company 

The positive market reaction bodes well for upcoming public offerings for software companies that focus on providing services to other businesses, including Palantir, as more organisations continue to generate data which needs to be stored and protected. Focusing on the enterprise means higher client budgets and longer contract lengths, which means earning more revenue on fewer customers. 

It follows a lacklustre entrance from much-hyped technology stock Uber last year, which saw shares tumble on its first day of trading. As of Wednesday, Uber’s shares were resting below $40 a piece. Airbnb is also expected to trade publicly this year, after a recovery from a Covid-19 induced travel slump.

Snowflake’s database primarily relies on Amazon Web Services and it is tied into a five-year, $1.2bn cloud contract with the company, which has raised questions among investors and customers about its future. It pledged to ease its dependence on Amazon and use more of Google and Microsoft architecture during a recent investor presentation. 

Enterprise software giants Amazon, Google, Microsoft, SAP and Oracle all offer competing data warehousing products. Amazon is marketing its own Snowflake competitor, Redshift. 

Snowflake was founded in San Mateo, California, in 2012. It counts Deliveroo, Sony Pictures, Penguin Random House, DocuSign among its customers.