Snowflake’s Extraordinary Post-IPO Valuation Warrants Some Caution

Snowflake’s Extraordinary Post-IPO Valuation Warrants Some Caution

Following its massive first-day gains, Snowflake  (SNOW) – Get Report sports a truly epic valuation — even by the current standards of high-growth software and cloud services firms.

After pricing its 28 million-share IPO at $120 — well above an initial range of $75 to $85 — Snowflake, the provider of a popular cloud data warehousing platform, opened at $245 and soared as high as $319.

Shares have since cooled off a bit and are trading at $269 as of the time of this article. But that’s still good for a 124% first-day pop.

At $269, Snowflake is worth more than $96 billion after accounting for outstanding stock options, restricted stock units (RSU) and warrants. After backing out the roughly $4.5 billion in cash Snowflake possesses following its IPO and share sales to Berkshire Hathaway  (BRK.A) – Get Report and Salesforce.com  (CRM) – Get Report, the company has an enterprise value of around $91.5 billion.

Such an enterprise value spells an eye-popping valuation of 227 times Snowflake’s revenue during its last four quarters ($403 million). This valuation is also more than seven times higher than the $12.4 billion valuation Snowflake received in a February funding round.

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