What Caught Our Attention in the Investment World? – Week of September 14-18, 2020

By Kuldip K. Ambastha

In a volatile week which saw technology (tech) stocks struggle overall, the initial public offering (IPO) of Snowflake Inc. (SNOW) stood out as a star performer. The IPO was priced at $120.00 per share, though the shares opened up on the New York Stock Exchange (NYSE) at an astounding $245.00 per share. Holders of pre-IPO stock would have profited handsomely by selling off their holdings on the first trading day of Wednesday, September 16, 2020. During that day, a high point of $319.00 per share was seen along with a low point of $231.11 per share.

Snowflake Inc. is a tech company which provides clients with the ability to analyze and share large amounts of data and increase data management capacity when needed, versus relying on databases which require capital-intensive hardware. This sort of cloud-based data management is in great demand by a variety of clients.

After three full trading days, the stock had a $240.00 per share closing price at the end of Friday, September 18, 2020. Pre-IPO stockholders who sold their holdings in the last few trading days could have benefited immensely. It is too soon to tell if other investors will benefit from their positions in Snowflake Inc. over the long run. The pop in the share price seen from a starting point of $120.00 per share set off a debate on whether or not the traditional IPO process is broken when it comes to a soon-to-be-public company maximizing the dollars raised. Is a direct listing of pre-existing shares better? Is an IPO driven by a special purpose acquisition company (SPAC) more efficient? Would using a Dutch auction to set an IPO price be advisable? Only time will tell.

Keywords – Snowflake Inc., Snowflake, SNOW, technology, tech, initial public offering, IPO, New York Stock Exchange, NYSE, data management, cloud.

Disclosure – The principals and clients of Ambastha Financial LLC do not have any position in SNOW.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

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