Snowflake (NYSE: SNOW) stock price soared 112% on its first trading day and valuations grew to $70 billion as its business model of providing data warehouse services helped in optimizing investors’ confidence. Warren Buffett’s backing and massive investments in the data warehouse company added to investor’s sentiments.
Buffett’s Berkshire Hathaway bought $250 million worth of stock along with an additional 4.04 million shares from other investors.
The market analysts say Snowflake stock price could double from the current level if it outperformed the closest competitors like Oracle (NYSE: ORCL). King Lip of Baker Avenue Asset Management sees strong competition between both companies over the coming days.
The California-based Oracle offers “on-premise” data warehousing while Snowflake provides “off-premise” storage. Meanwhile, King Lip claims that off-premise data services are trending higher, thanks to its potential of lowering the costs for organizations and better flexibility regarding remote resources.
“In theory, more and more customers are moving their business from on-premises to off-premises,” Lip said on CNBC.
Snowflake stock price is currently trading around $227, down from an all-time high of $319 that it had hit yesterday. The IPO price was standing around $120 a share.
Snowflake products are also likely to compete with other big players like Microsoft’s Azure (NASDAQ: MSFT), Amazon’s (NASDAQ: AMZN) AWS, and Google’s (NASDAQ: GOOG) Cloud. The company says its cloud data market stands around $81 billion.
Its financial history has also been contributing to investor’s sentiments. Snowflake has generated revenue growth of 173% in fiscal 2019 from the past year. It’s fiscal 2020 first-half revenue jumped 133% from the prior year.
The total number of customers was at 2,392 at the end of 2019 while customers increased year over year to 3,117 at the end of the first half this year. On the negative side, the company is still struggling to turn big revenue growth into profits.