Berkshire Hathaway To Buy $570M Stake In Cloud Computing Firm Snowflake
Berkshire Hathaway plans to invest more than $570 million in cloud data company Snowflake, which has filed for an initial public offering (IPO) of stock. The deal comes as the pandemic has boosted the stock prices of cloud computing companies.
The Financial Times reported that Snowflake’s updated IPO filing valued the company at $23.7 billion. The plan is for Warren Buffet’s Berkshire Hathaway to buy $250 million in shares direct from the company at the time of its IPO. Also, Berkshire would buy another block of shares, worth more than $320 million, from one of the company’s investors.
The target valuation points to the high expectations for the company, whose technology aims to handle large volumes of data. Snowflake’s website says it is a “cloud data platform.”
The Financial Times said that the Snowflake investments would mark “a rare venture into the enterprise technology market by Warren Buffett after a failed bet on IBM” earlier in the decade. Buffett has mostly avoided the tech sector, on the idea that companies in the sector were vulnerable to sudden and disruptive shifts in value.
Snowflake said it expected to price shares in its IPO at $75 to $85 each. That would mean the company could raise $3.24 billion overall, the Financial Times said.
In its IPO filing with the U.S. Securities and Exchange Commission (SEC), Snowflake said, “We believe in a data connected world where organizations have seamless access to explore, share, and unlock the value of data.”
The SEC filing showed Snowflake’s revenue grew 148 percent in the first quarter and 122 percent in the second quarter. Meanwhile, sales boomed. For the first half of the year, sales reached $242 million, almost as much as the $265 million the firm reported for all of last year.
Revenues, however, are not profits. Snowflake reported a net loss of $348.5 million in 2019 — and losses so far this year total $171.3 million.