The initial public offering of US technology company Snowflake last week was the equivalent of “yet more cases of champagne arriving at a party well after midnight when the guests are already several sheets to the wind”, says Robert Cyran on Breakingviews. The share price shot up by more than 150% at one point during the first day of trading. Even though shares subsequently fell back a bit, the company is now worth $63bn, compared with the valuation of just $12bn implied by a private funding round earlier this year.
It’s no surprise that investors – which include Warren Buffett’s Berkshire Hathaway – are enthusiastic about Snowflake, says Dan Gallagher in The Wall Street Journal. The firm’s cloud-based software “allows enterprises to rapidly analyse business information faster than traditional database software”. Revenue has “grown by an average of 141% on a year-over-year basis over the past four quarters”. Still, its “stratospheric valuation” will force Snowflake to keep up a “blistering pace” if it is not to disappoint. Even if the business continues to grow at the current rate over the next 12 months, it will still trade at “more than 70 times forward sales”.
The big question is whether Snowflake’s “nosebleed” valuation heralds a runaway shift in market sentiment, says Richard Waters in the Financial Times. It is “hard not to see at least some similarities with the dotcom era”, especially the obsession with “total addressable market” instead of sales or profitability. A new tech bubble might be good for Palantir, which uses similar technology to Snowflake. After years of “dithering about whether or not to go public”, Palantir’s shares will soon start trading in a direct listing.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
8 of the best properties for sale by the seaThis week: the best properties for sale beside the sea – from a six-storey Georgian townhouse in Tenby, Pembrokeshire, to a house on Scotland’s Knoydart peninsula overlooking the Sound of Sleat
-
Is UK prime property making a comeback as a safe haven asset?Cheap prime central London property is attracting overseas buyers, helping it regain its safe haven status
-
Out of America's shadow: Why Trump's tariff chaos may be good for non-US stocksOpinion Upending global investment and trade could benefit other countries at the expense of the US market, says Cris Sholto Heaton
-
BP's 'long, painful decline' – and why next year could be even tougherOpinion Long-suffering shareholders in oil giant BP have been pushing for change. It won’t come soon enough, says Matthew Lynn
-
Investment trusts tap the profits in exotic and obscure global marketsOpinion Peter Walls, manager of the Unicorn Mastertrust fund, highlights three investment trusts as he shares where he'd put his money
-
Falling revenues and mounting debt spell trouble for Jumia TechnologiesStruggling African e-commerce platform Jumia Technologies looks headed for the exit, says Dr Matthew Partridge.
-
Next reports £1 billion in annual profits for the first time – what's next for the retailer?Clothing retailer Next has become only the fourth member of its sector to surpass £1 billion in annual profits. What does this mean for the company's future?
-
Best of British bargains: cash in on undervalued companies in the UK stock marketOpinion Michael Field, Chief Equity Market Strategist, EMEA, Morningstar, selects three attractive UK stocks where he'd put his money
-
Building firm Keller presents low debt and ample scope for growthGeotechnical contractor Keller, which supports vital global infrastructure, boasts rising profits and a cheap valuation
-
PZ Cussons share price down 75% in last decade – why it's one to watchOpinion Once-strong consumer-goods business PZ Cussons is out of favour with the market. That spells opportunity for investors, says Jamie Ward
