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Warren Buffett and Salesforce Will Invest in Snowflake's IPO

By Danny Vena - Sep 8, 2020 at 6:26PM

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The soon-to-be-public company gets a huge vote of confidence from two investing icons.

Cloud data management company Snowflake revealed in a regulatory filing today that Berkshire Hathaway (BRK.A 0.56%) (BRK.B 0.46%) and salesforce.com (CRM -1.00%) would each make a $250 million investment in the company using a concurrent private placement in conjunction with its initial public offering (IPO)

In an amended S-1 filed with the Securities and Exchange Commission today, Snowflake also said it will offer 28 million shares in a range of $75 to $85 per share, which would raise more than $2.7 billion for the start-up. This would value the cloud-native company at between $21 billion and nearly $24 billion.  

Cloud computing icons over a blurred background of servers.

Image source: Getty Images.

The move was somewhat surprising for Buffett, given the Oracle of Omaha's track record of avoiding technology issues. That has changed as Ted Weschler and Todd Combs, two of Buffett's money managers, have branched further into tech stocks in recent years, adding Apple (AAPL -0.44%) and Amazon (AMZN -1.44%), among others. Assuming the $80-per-share midpoint of the range, the move would net Buffett 3.125 million shares of the company.

That's not all. Berkshire has also agreed to purchase an additional 4,042,043 shares from current shareholders in a private, secondary transaction, paying an amount equal to the IPO price. This suggests that the combined total of Buffett's investment could exceed $500 million.

The move by Salesforce isn't much of a surprise, given the company's penchant for investing in early stage tech companies. Over the past several years, the tech bigwig has invested in Twilio (TWLO -0.75%), Dropbox (DBX -0.53%), and DocuSign (DOCU -4.05%), just to name a few.

Snowflake has recently generated stratospheric revenue growth that appears to be attracting investors. Revenue soared 173% year over year for the fiscal year ended Jan. 31, 2020. The frantic pace of growth continued into the first half of this year, when revenue grew 133%. 

 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Amazon, Apple, DocuSign, and Twilio. The Motley Fool owns shares of and recommends Amazon, Apple, Berkshire Hathaway (B shares), DocuSign, Salesforce.com, and Twilio and recommends the following options: long January 2022 $1920 calls on Amazon, long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), short January 2022 $1940 calls on Amazon, and short September 2020 $200 calls on Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.

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Stocks Mentioned

Salesforce, Inc. Stock Quote
Salesforce, Inc.
CRM
$186.73 (-1.00%) $-1.88
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.A
$445,301.99 (0.56%) $2,501.99
Berkshire Hathaway Inc. Stock Quote
Berkshire Hathaway Inc.
BRK.B
$296.47 (0.46%) $1.36
Apple Inc. Stock Quote
Apple Inc.
AAPL
$168.49 (-0.44%) $0.75
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$140.64 (-1.44%) $-2.05
Twilio Inc. Stock Quote
Twilio Inc.
TWLO
$85.58 (-0.75%) $0.65
Dropbox Stock Quote
Dropbox
DBX
$24.56 (-0.53%) $0.13
DocuSign Stock Quote
DocuSign
DOCU
$72.34 (-4.05%) $-3.05

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