Snowflake IPO: what you need to know

The Snowflake IPO is one of the most hotly anticipated tech listings of the year. Learn everything you need to know about the Snowflake IPO, including how to trade it and who the current Snowflake investors are.

When is the Snowflake IPO?

Snowflake is currently aiming for summer 2020 as the date for its intial public offering (IPO). But company leadership has also stated that the IPO might be postponed until September or October 2020 to ensure ideal market conditions.

What is Snowflake likely to be valued at when it lists?

Current estimates are that Snowflake could be valued anywhere between $15 billion and $20 billion when it completes its listing – provided that the increased interest in cloud computing continues.

This valuation is supported by the most recent round of Snowflake fundraising in February 2020, where the company was valued at around $12.4 billion after managing to secure $479 million in investments.

What could the Snowflake share price be when it lists?

The target price per share for the Snowflake IPO is currently unconfirmed, as is the number of shares that the company intends to release.

Given the confidential nature of the filing with the Securities and Exchange Commission (SEC), we won’t know more about the Snowflake IPO or the target share price until company insiders are able to reveal more information, or a prospectus for the IPO is released.

How to trade the Snowflake IPO

You’ll be able to trade Snowflake shares as soon as the company goes public on the day of its IPO. As a US tech company, it’s likely to list on the Nasdaq exchange – but because the specifics of the IPO filing are currently confidential, this is open to speculation.

There are two ways to take a position on the Snowflake IPO and share price. You could either trade on the price of shares rising or falling with spread bets and CFDs, or you could invest in the company directly by share dealing.

When you trade Snowflake shares with us, you’ll be speculating on their value rising or falling with spread bets and CFDs. These are financial derivatives, which means that you’ll be able to take a position on Snowflake shares without having to take direct ownership of Snowflake stock.

Trades with spread bets and CFDs are opened with leverage – which enables you to command a much larger position for an initial deposit, known as margin. But remember that leverage will magnify both your profits and your losses.

Create an account

If trading doesn’t sound like it’s for you, and you’d like to become a Snowflake investor, then you might want to consider opening a share dealing account. This will let you invest directly in Snowflake, meaning that you’ll own the shares and you’ll be eligible to receive dividends and voting rights – so long as the company grants them.

Why is Snowflake listing?

Snowflake is listing amid growing investor interest, with many seeking to buy shares in the cloud computing tech startup sooner rather than later. However, Frank Slootman – Snowflake chief executive officer (CEO) – has stated that there is no real pressure to list from investors but, rather, an IPO is the next logical step after a few rounds of very successful fundraising.

At the same time, Slootman recognises that there is an inkling of pressure from current Snowflake employees and investors who are looking to cash in on their current share holdings and equity in the company.

The Snowflake IPO is going to be one of the most exciting listings for traders this year. On the back of the coronavirus pandemic, cloud computing solutions have seen increased demand as companies shift from office working to working from home.

Who are Snowflake’s current investors?

Snowflake’s current investors are Dragoneer Investment Group and Salesforce Ventures, an arm of Inc. Other investors include Sequoia, ICONIQ Capital, Altimeter Capital, Redpoint Ventures and Sutter Hill Ventures.

Dragoneer Investment Group and Salesforce Ventures led the latest round of fundraising in February 2020 – which helped to raise $479 billion.

It is uncertain how much money each of these investors has committed to Snowflake, and it is equally uncertain how much each stands to gain from the Snowflake IPO.

What’s the outlook for Snowflake?

The short-term outlook for Snowflake is positive because companies and individuals are looking more actively for secure and streamlined cloud computing solutions – especially as working from home becomes the norm.

Plus, if the most recent fundraising round is anything to go off, investor confidence in the company to post strong earnings after the IPO is high.

The long-term outlook for Snowflake will depend on how heavily companies rely on cloud computing solutions in the coming years, and on whether the company can continue to deliver on its business model once it goes public.

What is Snowflake’s business model?

Snowflake’s business model is built around cloud computing and data warehousing, with a stated aim to deliver where they say other data platforms and big data solutions fall short. They plan to achieve this by enabling ‘any user to work with any data, without limits on scale, performance or flexibility’.

Snowflake’s developers built a new data platform from the ground up for this very purpose, so that the platform is powerful, but also simple to use.

How has Snowflake been performing?

Snowflake has been performing strongly in the past year. CEO Frank Slootman stated that the company made well over $100 million in revenue in 2019, achieving a 174% increase in revenue on the previous year.

What’s more, the valuation of $12.8 billion that the company achieved after its fundraising in February 2020 was more than three times as big as its previous valuation of $3.9 billion in 2018 – indicating strong year-on-year (YoY) performance.

Who are Snowflake’s main competitors?

Snowflake’s main competitors are Google Cloud Platform, Microsoft Azure and Amazon Web Solutions (AWS). But, the company is undeterred by these three cloud computing behemoths, stating that the presence of three large rivals reduces the chance that a startup like Snowflake will be forced out of the market.

That’s because no single company controls a monopoly of the market, so competition between different businesses is more readily encouraged.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material 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 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research 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 and quarterly summary.

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