Snowflakes and Bubbles

By Charlie Bilello

16 Sep 2020

Snowflake went public today.


Snowflake, a cloud-based data storage and analytics company.

You had me at “cloud.” What’s the ticker?


Awesome, catchy and easy to remember. Are they profitable?

No. They lost $349 million in the fiscal year ending in January and $171 million in the first six months of this year.

Even better, just like Amazon when it started. How about revenues?

Up and to the right. 121% year-over-year growth in Q2. $403 million in sales over the last 12 months (see S-1 here).

Nothing but love. What’s the catch?

Well, its market cap hit a high of $88.4 billion today in its first day of trading. That’s a multiple of 219x sales and a higher market value than 431 companies in the S&P 500 (with lower sales than every S&P 500 member). When Amazon went public in 1997 it was a $442 million company and it only hit an $80 billion market cap in 2011 when its sales were at $40 billion.

But it’s the cloud, right? Valuations don’t matter up there. Surely there are other companies out there with a higher multiple, right?

Yes of course, this is 2020. Nikola ($NKLA) is currently trading at over 121,000x sales.

Is it in the cloud too?

No, they sell plan to sell hydrogen fuel cell electric semi-trucks.

So you’re telling me a truck company that hasn’t sold a truck yet has a higher valuation than a cloud company?

Correct. At the same valuation as Nikola, Snowflake would have a market value of over $48 trillion, 550x higher than today’s intraday high. It would be the largest company in the world by a factor of 24x.

What’s that ticker again?

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