Cloud software and data companies are driving the IPO market amid the COVID-19 business precarious situations. We have presented below a few of them that may benefit you. The end of September saw the largest Software IPO announcements. One of the most influential among them is the Snowflake (SNOW), a data warehousing company that assists businesses in a better way to access and use their data. While the company started more than a year ago, it only went public by the end of September 2020.
Snowflake data warehouse company is quite phenomenal in its approach and already have world’s most innovative companies as its key customers including the Adobe (ADBE), Square (SQ), DocuSign (DOCU), and Overstock.com (OSTK).
Snowflake is one of the world’s fastest-growing businesses. Their sales have also surged incredibly to 174% over the past year and that’s faster than Zoom Video (ZM) was growing before it went public.
Besides, the company is currently one of the most fast-developing companies globally. It has made a 174% whooping amount of sale over the past year and this is just the beginning of brighter years ahead.
The company is posting a growth of 22% annually and by 2025, it’ll potentially be a 137 USD billion industry. The cloud analytics industry as a whole is positioned to reach 72 USD billion valuations by 2026.
The company is making staggering growth records and the opportunity for you to catch up on your potential gain may be now.
However, you need to exercise some caution as excessively hyped companies rarely deliver investors’ expectations.
Is Snowflake IPO Over-Hyped?
Large hyped IPOs normally deliver below expectations. In 2019, Uber (UBER) and Lyft (LYFT) that were overhyped, left investors with disappointments. The two stocks crashed 35% and above within their first six months of trading.
Facebook’s (FB) IPO was likewise a disappointment. It fell by 54% within the first five months as a publicly-traded company before it eventually bottomed out. This occurs every time in the IPO market.
Anytime the IPO is over-hyped, the enthusiasm is equally-priced in. And the majority of the price rise is frequently captured before retail investors take advantage of it.
As for Snowflake, the shares were primarily priced roughly 75 USD and 85 USD, and just within a week, the price of Snowflake jumped its price range up to 120 USD. That was a rise of 50% more than the original price level. The most remarkable move it made was to rise from the IPO price level at a bit above 250 USD per share to 319 USD which is four times the primary IPO price.
At its highest level, Snowflake was worth 80 billion USD on the day of the IPO. That’s a rise of more than 431 companies in the S&P 500.
Other Cloud IPOS
1. Dev Ops Platform JFrog (FROG)
The next cloud IPO that’s making a staggering move was Dev Ops platform JFrog (FROG).
2. Sumo Logic (SUMO), Amwell (AMWL), and Unity Software (U) IPOS
The next cloud log management companies are Sumo Logic (SUMO) and telemedicine company, Amwell (AMWL) IPO’d. Soon after the launch of these two companies, a 3D gaming company Unity Software (U) did its IPO.
More Cloud IPOS Soon to Emerge
The list didn’t end there. Data mining company Palantir (PLTR), a workforce collaboration company, Asana (ASANA), and home-sharing giant Airbnb (AIRB) are equally preparing to make their initial public offerings.
This type of IPOs occurred between 2016 to 2017, when a few exciting IPOs went public. An example of these companies is a large software company, Twilio (TWLO) which went public in June 2016. Since then the company has reached more than 10 times its original valuation.
Again, The Trade Desk (TTD) that IPO’D shortly after that has reached more than 1,600% valuation since after its initial IPO in 2016.
Also, Cloud computing company, Coupa Software (COUP) that IPO’d in 2016 has reached roughly 1,000% of its original valuation during the IPO.
Next is the Data analytics company, Alteryx (AYX), a popular software company that had its Initial Public Offering in March 2017. It has currently marked roughly a 1,100% valuation.
The IPO Market is Normally a Good Option for Patient Investors
Frequently, excessively hyped IPOs normally show an easy to predict price movements. They usually fall after the Initial Public Offering. So, you may have to wait till after the IPO to buy. Starting from 2016 to 2017 all the IPOs followed a similar pattern of growth. They bottomed after going public. So, if you could delay for a further two months, for instance, you could buy The Trade Desk at a 24% discount compared to the IPO pegged price. You could equally buy Twilio shares at a 19% discount if you delay till another 11 months to buy. The scenario is equally the same as the Coupa which you can buy at a 30% discount five months after its Initial Public Offering.