How to buy Snowflake shares from Australia
The balance sheet looks promising for this cloud-based data warehouse.
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Add Snowflake to the sizeable list of tech companies that went public in 2020. Should you add this cloud-focused data platform to your watch list? It depends on what you think of its growth trajectory — and its relationship with its competitors.
Snowflake listed on the New York Stock Exchange on September 16 and closed its first day at $US253.93.
As it's now public, you can buy shares in Snowflake through a share trading platform with access to the US market.
What we know about the Snowflake IPO
On August 24, Snowflake filed an S-1 with the US Securities and Exchange Commission. It planned to list its Class A common stock on the New York Stock Exchange under the ticker symbol "SNOW."
The suggested share price was $US100 to $US110 and the deal was underwritten by Goldman Sachs, J.P. Morgan and Citigroup, among others. It went live on September 16 and closed its first day at $US253.93.
As Snowflake's stock is live, Australian investors interested in purchasing shares can do so through a US market brokerage account.
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How to buy shares in Snowflake
It's not easy to invest in US IPOs from Australia, however you can buy shares in the company once it goes public. Here's what to expect of the investment process:
- Compare share trading platforms. To buy shares in a US company, you'll need to sign up to a platform with US market access. If you're a beginner, look for a platform with low commissions and investment tools to track your portfolio. Narrow down top brands with our comparison table.
- Open and fund your brokerage account. Complete an application with your personal and financial details, like your ID and bank information. Fund your account with a bank transfer, credit card or debit card.
- Search for Snowflake. Find the stock by name or ticker symbol: SNOW. Research its history to confirm it's a solid investment against your financial goals.
- Purchase now or later. Buy today with a market order or use a limit order to delay your purchase until Snowflake stock reaches your desired price. To spread out your purchase, look into dollar-cost averaging, which smooths out buying at consistent intervals and amounts.
- Decide on how many to buy. Weigh your budget against a diversified portfolio that can minimise risk through the market's ups and downs. You may be able to buy a fractional share of Snowflake, depending on your broker.
- Check in on your investment. Congratulations, you own a part of Snowflake. Optimise your portfolio by tracking how your stock — and even the business — performs with an eye on the long term. You may be eligible for dividends and shareholder voting rights on directors and management that can affect your stock.
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What we know about Snowflake's balance sheet
Snowflake raised $US450 million in its Series F funding round in 2018 and another $US479 million in its Series G earlier this year. Its most recent valuation sat at a sizeable $US12.5 billion.
So, what does the company's balance sheet look like following the influx of capital?
Snowflake reported $US96.6 million in revenue for fiscal 2019 followed by $US264.7 million in revenue for fiscal 2020. Snowflake is growing, that much is clear. But whether it's profitable is a different story. Snowflake reported net losses of $178 million in 2019 and $348.5 million in 2020.
But here's the good news: Snowflake's losses are falling. In Q2 2019, the company reported a net loss of $US177.2 million, while in Q2 2020, net losses sat at $US171.2 million. And the company reported 121% year-over-year growth for Q2 — a promising figure for interested investors.
Snowflake investment risks
Snowflake competes with the likes of Amazon Web Services, Microsoft Azure and Google Cloud. And complicating this already competitive landscape is the fact that Snowflake actually relies on its competitors for storage and computing power.
CNBC reports that 85% of Snowflake's workloads are housed on Amazon Web Services, with the other 15% split between Microsoft Azure and Google Cloud. It's not easy to undercut and outperform a competitor when you rely on them to keep you in business.
The bottom line is that Snowflake isn't the only company trying to capitalise on the shift from traditional data storage to the cloud. There are some big-name players on the field and competition in the tech sector is notoriously fierce.
Snowflake is a cloud-based platform that helps businesses securely house and analyse their data. It was founded in 2012 and is headquartered in San Mateo, California. It has over 3,000 customers — 56 of which are accounts worth over $1 million, including Cisco and Capital One. The platform facilitates over 500 million queries daily.
Snowflake is not an accredited business with the Better Business Bureau (BBB) from which it receives an F rating for failing to respond to a complaint.
How are similar stocks performing?
Snowflake is frequently compared to Apple, Amazon and Google, but these companies do much more than cloud-based data storage. Companies that exclusively focus on the type of service Snowflake offers include Cloudera, Teradata and MongoDB, but these companies haven't been performing as well. Examining these competitor stocks can help you gauge how the market is doing but aren't a direct indicator of how Snowflake will perform.
Compare US stock trading platforms
To buy stock, you'll need to open a brokerage account. Compare your options using the table below to find the best fit.
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