Is Snowflake (SNOW) in a Bubble After Missing Earnings?

Snowflake Inc. (SNOW) provides a cloud-based data platform in the United States and worldwide. The proprietary platform allows customers to consolidate data into a single source of truth to drive meaningful business insights, build data-driven applications, and share data. Various organizations use the platform across a vast range of industries…

Snowflake (SNOW – Get Rating) has been around since 2012, but the company went public via an IPO in mid-September 2020. This year has been a mixed blessing for technology and initial public offerings. The global pandemic has weighed on global economic growth. Meanwhile, technology shares soared as the industry provided the tools and services during lockdowns and social distancing.

The technology sector soared as it benefited from COVID-19. The coronavirus increased the demand for online technology, which hastened the growth of businesses. The pandemic changed behaviors as many non-tech savvy people had to educate themselves and change to survive and thrive. The shift will remain a significant historical legacy of 2020 long after the coronavirus fades into memories.

SNOW is a company that has a bright future. Many leading investors saw the potential for the company and made substantial investments during the IPO.

A high-profile IPO in September with high-profile investors

SNOW shares opened for trading the day of its initial public offering on September 16, 2020, at $245 per share. The stock began trading at more than double its IPO prices. The timing of the offering was serendipitous as it coincided with a substantial bullish run in technology stocks.

SNOW came to market with lots of bullish wind in its sails. The company had commitments to buy its shares from Warren Buffett’s Berkshire Hathaway (BRK.B) and Marc Benioff’s Salesforce Ventures (CRM). The company generated lots of excitement because it offers a new twist on technology infrastructure for many businesses.

SNOW produces database software that uses the same standard as Oracle Corporation (ORCL), but can be used in the cloud and scaled up or down as needed. SNOW offers its customers variable pricing depending on usage. SNOW has a franchise as it is the only standalone company offering this type of software that runs on all of their cloud platforms.

The high-profile IPO buyers did well, as the shares continued to…

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