Should I Invest In Snowflake - The Most Hyped IPO In Years
Should I Invest In Snowflake? | Coffee With Markus | Episode 89
Intro: 00:00
What's Happening In The Markets?: 1:44
Should I Invest In Snowflake (SNOW) IPO?: 2:59
Deep Dive Q&A: 13:11
C: $2,475 profit today closing out wheel/covered call strategies... another $1,900 targeted for Friday. 13:55
C: I used to invest in IPOs. My father-in-law would let me in on the ones that were good and told me about the ones that were not good. 15:11
C: IPOs seem to end up being a collective legal pump-n-dump, from that pattern. 16:46
Q: When should you buy the stock after an IPO? 17:46
Q: When one gets in on the initial IPO does he have to hold it for like 6 months? 26:18
So the markets have been doing great this week, but today things basically moved sideways most of the day with the FOMC meeting.
Jerome Powell came out and said they would not be raising rates, but going into the close we saw a bit of a sell-off. But if we take a look at the indexes they all seem to be holding important support right here.
The big focus for today was definitely the much anticipated IPO of Snowflake Inc. (ticker symbol SNOW). Snowflake Inc. is a cloud-based data-warehousing startup that was founded in 2012 and today they went public.
So what exactly does that mean? Well, an IPO or Initial Public Offering is a way for a company to raise capital in exchange for small pieces of their company called stock shares...and let's just say that the SNOW IPO was a big one! In fact, their IPO set a record for software companies and has been the biggest in the U.S. this year.
Originally their IPO price was supposed to be between $75-85, but last week both Berkshire Hathaway and Salesforce committed to buying millions of shares. Because of this, the price was then set to release between $100-$110. But this afternoon around noon when they finally started trading it opened up at $249.99.
Within a matter of minutes, it shot up as high as $319. That was over a 27% move within 3 minutes....crazy! That is what we call FOMO (Fear Of Missing Out) in the trading world.
And that's what tends to happen with IPOs. Last year we had a few noteworthy IPOs like UBER, LYFT, CHWY, and PINS.
So let's take a look at how all of these different stocks performed out of the gate. First, we'll look at UBER. Much like Snowflake (SNOW), UBER had an explosive first day of trading. Then for about two months it basically moved sideways, until its first earnings report. From there, things got pretty ugly! In a matter of months, the stock went from $43 to as low as $25.58.
Now let's take a look at their competitor LYFT. Very much like SNOW and UBER, it too had a very volatile first day of trading, but nearly immediately started moving lower. LYFT IPO'd at $87.24 in March of 2019 and by October it found a temporary bottom at $37.07.
Starting to notice a pattern yet? Well, let's take a look at another IPO that was really hyped last year, Chewy (CHWY). Its first day of trading was also very volatile. And much like the others, it too started quickly moving lower.
A few other great examples from last year would be Pinterest and Slack. Both acted nearly identically to the other IPOs we just discussed. So after all that discussion, should you invest in Snowflake (SNOW)?
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