Warren Buffett’s Berkshire Hathaway is looking at a $US1 billion-plus paper profit from its investment in a hot tech listing in September.
The data warehouse firm Snowflake Inc might have reported a larger third-quarter loss last week, in its first quarterly results following its IPO in September but that didn’t worry investors who sent the shares up 14% on Friday and more than 18% for the week as a whole.
That saw the company’s market value jump to more than $US94 billion after the shares hit an all-time high of $US395.80 during trading on Friday.
Berkshire owns 2.2% of Snowflake’s issued capital which was valued at $US2.02 billion at Friday’s close. That value rose 46% in the past month to last Friday.
(There are only 40 million shares on issue and of these, only just over 19 million are available to the public to trade – so the tight capitalisation is the driver).
The company $US3.36 billion in its initial public offering in September after Berkshire Hathaway popped up with a surprise late stake of 2.1 million shares at a cost of $US250 million. Berkshire then bought another 4 million shares at the issue price of $US1.20 a share from former CEO, Robert Muglia at a cost of $485 million.
Total cost, $US735 million – value, $US2.02 billion, a nice fat profit more than $US1.265 billion which will help make Berkshire’s bottom line look a little fatter next February when the December quarter and 2020 results are released.
Snowflake said product revenue, or sales from services on its platform, more than doubled to $148.5 million, accounting for 93% of total revenue in the quarter.
Snowflake sells a cloud data platform that offers to consolidate a company’s data onto one platform. Cloud-based services have grown rapidly this year as companies around the world adapted to working remotely during the COVID-19 pandemic and located their data on one location in the cloud..
Net loss for the quarter ended October 31 jumped to $US168.9 million from $US88.1 million a year earlier, the company said.
Total revenue for the quarter more than doubled to $US159.6 million which is why the shares are continuing to rise.
