Snowflake IPO and 3 other must-watch upcoming listings

We examine the key details behind a number of high profile tech companies that are soon set to publicly list, including Snowflake, Unity, JFrog and Asana.

Snowflake IPO heats up even as tech stocks come under pressure

US tech is in turmoil. Since hitting an all-time high of 12,439 points on 9 September, the tech-heavy Nasdaq 100 index has plunged, falling close to 11% in that period, as volatility returns to global equity markets.

Indeed, over the last five sessions, many of the Nasdaq’s darlings have faced significant selling pressure, with the likes of Tesla seeing its share price fall 7.49%, Apple dropping 6.74%, Microsoft falling 5.1%, and Amazon dipping 5.9%.

This volatility hasn’t dissuaded a number tech companies from pushing ahead with their own initial public offerings (IPOs) – with a handful of prominent companies releasing updated IPO prospectuses over the last few weeks, including Snowflake.

Some have argued that Snowflake is set to be one of the largest IPOs of 2020 – due to its explosive growth and star-studded line-up of backers, which now includes Warren Buffett.

Snowflake, which operates in the data-warehousing space, has indeed taken off in popularity over the last few years. Snowflake, which prides itself on a customer centric approach to business, in the second quarter posted revenues of $133 million, representing an impressive growth rate of 121%; boasted a net retention rate of 158% and had 3,117 customers, of which 56 contributed revenue of above $1 million.

As part of the company's update prospectus, the Snowflake IPO share price range has been set at between $75.00 and $85.00 per share – with that high watermark share price implying a market valuation of $23.7 billion.

‘The reason is that our growth trajectory is so fierce and our addressable market is so large. When companies grow so fast, as Snowflake has, the valuation may seem like a big number now but not later,’ the company’s CEO, Frank Slootman recently told the San Francisco Business Times.

Want to learn more about Snowflake before it IPOs this Wednesday, September 16? Discover our deep-dive, Snowflake IPO Preview: The $35 Billion Bull Thesis here.

In an interesting turn of events – last week it was also revealed that Warren Buffett’s Berkshire Hathaway was set to invest as much as $250 million, through a private placement that would see the conglomerate buy some 3.25 million Snowflake shares, at the IPO price. In addition to that, it was noted that Berkshire had arranged to purchase an additional ~4 million shares – from one of Snowflake’s stockholders – in a secondary transaction.

Together, this would see Berkshire’s stake in Snowflake valued at around $560 million.

The company also announced that Salesforce Ventures – the CRM giant’s investment arm – would also be taking a $250 million private placement in Snowflake – also at the IPO price.

With all of this hype surrounding the upcoming Snowflake IPO – its staggering growth, a sticky user-base, and the Buffett inclusion – many have other high profile IPOs, which may have otherwise garnered significant attention, have potentially drifted under the radar. With that in mind, below we take a brief look at three initial public offerings/ direct listings that investors might consider worth watching, including:

Unity IPO: More than just a game

In the most basic of terms, Unity Software develops the technology used in the creation of games and other interactive media products. 'We are the world's leading platform for creating and operating interactive, real-time 3D content,’ the company noted in its prospectus.

Unity has built that world leading status off the back of 1.5 million monthly active creators, 15,000 projects created per day, and more than 50% of mobile, PC and console games combined using the Unity engine.

Importantly however, the use cases for Unity’s software extends beyond video games, with uses across a number of industries including: architecture, engineering & construction, media & entertainment, and automotive, and transportation & manufacturing.

Beyond that, examining some Unity’s key operational metrics, for the six months ending 30 June, the company reported:

  • Revenues of $351 million, up from $252 million in the prior corresponding period
  • 716 customers contributing revenues in excess of $100,000, equal to 74% of total revenues
  • A gross profit of $29 million
  • A net loss of $54 million

As part of the company's update prospectus, the Unity IPO share price range has been set at between $34.00 and $42.00 per share.

Once listed, Unity will trade under the ticker ‘U’.

Asana IPO: The path least taken

A popular work management software company, Asana boasts over 82,000 customers, 1.3 million paid users and is available in some 190 countries across the globe.

‘Asana is a system of record for work. This system collects and structures institutional knowledge about how past work was completed and provides a real-time plan and roadmap for current and future initiatives,’ the company flagged in its recently amended prospectus.

Though the demand for productivity improving programs is hardly new, competition in the work management software space has heated up in recent years, with the likes of Trello, Atlassian's Jira, and Workzone some key competitors.

Mind you, competition hasn’t stopped Asana recording robust growth: for the six months ending 31 July, the company reported:

  • Revenues of $99.7 million, up from $61.05 million in the prior corresponding period
  • An overall dollar-based net retention rate of 115%
  • A gross profit of 86.5 million
  • A net loss of $76 million

It should be noted that Asana has chosen to go public via a direct listing, opposed to an initial public offering, which means its stock will not be underwritten by an investment bank. Even so, Asana has provided some guidance as to where its stock might trade in a public market setting – noting that across a number of private transactions made between 1 February and 31 August, its stock traded between a $13.04 per share and $28.00 per share.

Once listed, Asana will trade under the ticker ‘ASAN’.

JFrog IPO: The tech used by tech

Centrally, JFrog assists companies with the management and release of their software updates; or, as JFrog’s management puts it:

‘We enable organizations to build and release software faster and more securely while empowering developers to be more efficient.’

With a focus on speed and security, JFrog has come to be recognised as a global leader in its field, touting a number of high profile customers, including: Facebook, Spotify, Google and Netflix.

Moreover, this market leading status has seen the company grow strongly over the last few years, currently boasting over more than 5,800 customers, 286 of which have an annual recurring revenue in excess of 100,000. The company has been cash flow positive for the last five years.

On a fundamental level, for the six months ending 31 July, JFrog reported:

  • Total revenues of $69.2 million, made up of subscription revenue ($63.4 million) and license revenue ($5.7 million)
  • A 139% net dollar retention rate, with 85% of revenues derived form Multi-product subscriptions
  • A gross profit of $56.1 million
  • A net loss of 426 thousand

As part of the company's update prospectus, the JFrog IPO share price range has been set at between $33.00 and $37.00 per share.

Once listed, JFrog will trade under the ticker ‘FROG’.

How to trade or invest in the Snowflake, Unity, JFrog or Asana IPO

You’ll be able to trade or invest in the companies we have discussed above as soon as they list (IPO): with two ways to take a position in these public offerings and share prices. You can either trade on the price of shares rising and falling with CFDs, or you can invest in the company directly by share trading.

To trade or invest in any of the companies discussed above, follow these steps:

  1. Learn more about the IPO you are interested in
  2. Decide whether to trade or invest
  3. Create an account
  4. Open and monitor your position

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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