Warren Buffett, who has a penchant for buying proven stocks with long-term value, is taking the unusual step of participating in the initial public offering of Snowflake. The Snowflake IPO will trade next week under the ticker SNOW.https://imasdk.googleapis.com/js/core/bridge3.408.0_en.html#goog_2030695303Volume 0%
Snowflake set pricing terms late Tuesday. The company plans to raise $2.2 billion by offering 28 million shares at a price range of $75 to $85. That gives it a market valuation in the range of $20.9 billion to $23.7 billion.
Snowflake is a cloud-based data-warehousing company. It has raised roughly $1.4 billion in venture capital funding. This includes $479 million raised in February, giving it a valuation of $12.4 billion.
$570 Million Investment By Warren Buffett
Built into the IPO are commitments from Buffett’s Berkshire Hathaway (BRKB) and Salesforce Ventures to each buy $250 million of Class A common stock in a private placement. In addition, Berkshire will buy an additional $320 million worth of shares. Those shares will be bought from an unnamed stakeholder in a secondary transaction. That brings Berkshire’s total investment to $570 million.
Salesforce Ventures is the venture capital unit of Salesforce.com (CRM).
Berkshire Hathaway stock edged up 0.8%, closing at 219.63 on the stock market today. Shares of Salesforce.com jumped 3.8%, to 250.43.
For the six-month period ended July 3, Snowflake reported revenue of $148.9 million, up 189% from the year-ago period. It showed a net loss of $171.3 million, vs. a loss of $177.2 million. The company reports having 3,117 customers.
Snowflake’s technology provides support for “data engineering, data lake, data warehousing, data science, data applications, and data sharing,” according to the Snowflake IPO filing.
Buffett’s latest investment comes as Berkshire’s cash pile climbed to a fresh record of $146.6 billion in the second quarter, up from $137 billion in the first quarter.
Buffett Puts More Cash To Use
Earlier this month, Berkshire revealed it bought nearly 21 million shares of gold mining giant Barrick Gold (GOLD), valued at more than $563 million, in the second quarter.
Prior to the second-quarter report, Buffett had shown signs he is willing to put more of his cash to use. In early July, the company agreed to acquire natural gas transmission and storage assets from Dominion Energy (DE) for $10 billion.
The lead underwriters of the Snowflake IPO include Goldman Sachs, Morgan Stanley and JPMorgan. It will price late Tuesday and trade Wednesday of next week.