The initial public offering (IPO) of Snowflake has gotten a big vote of confidence after Berkshire Hathaway (NYSE:BRK.A) and Salesforce (NYSE:CRM) each agreed to purchase $250 million of stock in the cloud computing company.
Regulatory filings show that Berkshire Hathaway has agreed to buy an additional four million shares from one of Snowflake’s current stockholders in a secondary transaction. Snowflake has said that the midpoint of its pricing range for the upcoming IPO is expected to be $80 per share, which would value Berkshire Hathaway’s stake at more than $550 million.
At that price, Snowflake would have a market cap of $22.3 billion, based on the latest shares outstanding count in its IPO prospectus.
The Salesforce stock purchase is not surprising given that the company has invested in numerous cloud software companies in recent years, including Zoom (NASDAQ:ZM), Twilio (NYSE:TWLO) and Dropbox (NASDAQ:DBX). Salesforce typically sells these shares shortly after the companies go public.
The Berkshire Hathaway investment is unusual as the company led by famed investor Warren Buffett has rarely gotten in on IPOs. However, Buffett does not make all the investing decisions himself these days and relies on executives Todd Combs and Ted Weschler to make many of the holding company’s investments, especially when it comes to technology stocks.
Snowflake, which gives businesses new ways to store and access data, is expected to hold its IPO in the coming months under the ticker symbol "SNOW." The company said in a prospectus last month that its revenue in the first half of 2020 more than doubled to $242 million from $104 million a year earlier.
