Snowflake's Stock More Than Doubles on First Day of Listing... IT Company Optimism Remains Strong

Closed at $253.93 on the 16th, up 111%... Optimistic Cloud Outlook and Buffett Investment Impact
High Interest in Tech IPOs... Existing Tech Stocks Price Decline

Snowflake banner displayed outside the New York Stock Exchange (NYSE) in the United States [Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] The stock price of Snowflake, a U.S. software company, more than doubled its initial public offering (IPO) price on its first day of trading, marking the largest IPO among IT companies this year. This reaffirmed the invincibility of IT stocks amid the continued strength of the tech-heavy Nasdaq.

According to Bloomberg and other sources on the 16th (local time), Snowflake's stock closed at $253.93 on its first day, up 111% from the IPO price. It started trading at $245 at the opening and surged to as high as $295 in early trading. Snowflake initially set its IPO price range at $75 to $85, raised it to $100 to $110 on the 14th, and finally settled at $120 on the day of listing.

With the stock price increase, the market capitalization swelled to $70.4 billion. Considering it was valued at $12.4 billion in the market in February, this represents nearly a sixfold increase.

This upward trend was partly driven by optimistic outlooks on the company's core business model of cloud services. Founded in 2012, Snowflake provides cloud-based data storage services to enterprises, enabling data sharing by utilizing various online storage spaces. Bloomberg described it as a challenger to Amazon, the industry leader.

Andrew Little, an analyst at Global X, explained, "The interest in Snowflake's IPO is a good example of how rapidly cloud computing adoption is accelerating among companies."

Snowflake also attracted attention recently due to an investment by Warren Buffett, chairman of Berkshire Hathaway. On the 8th, Berkshire Hathaway announced that following Buffett's $250 million private investment in Snowflake, it agreed to purchase an additional 4 million shares. The fact that Buffett, who usually avoids investing in tech stocks, invested in a software company sparked market reactions.

With Snowflake's successful debut, key executives including the CEO have joined the ranks of billionaires. Bloomberg reported that executives such as Frank Slootman, Bob Muglia, Michael Scarpelli, and Benoit Dageville each hold equity valued in the billions of dollars, describing it as "a flood of wealth pouring into Silicon Valley elites."

Interest in tech IPOs was also evident in the stock price of Israeli software company JFrog, which listed on Nasdaq the same day. JFrog's stock closed at $64.79, up 47.25% on its first day. While its initial market capitalization was expected to be $3.3 billion on the first day, the stock price rose more than anticipated, pushing the market cap beyond $5.7 billion. The company provides software for software developers.

However, tech stocks that had been strong earlier in the day declined. Apple and Facebook shares fell about 3% each, and Tesla's stock dropped 1.8%. While there is interest in IPOs, concerns remain that existing tech stocks are still priced high.