After a stunning start to life on the stock market on Wednesday, the Snowflake Inc (NYSE: SNOW) share price ran out of steam on Thursday and tumbled notably lower.
The cloud-based data management company's shares dropped over 10% to US$227.54.
This appears to have been driven by a combination of a pullback in tech shares and profit taking from some investors.
After all, despite the sizeable decline overnight, the Snowflake share price is still up almost 90% from its IPO price of US$120.00 per share.
What is Snowflake?
Snowflake is a leading cloud-based data platform provider which allows customers to consolidate data into a single source of truth to drive meaningful business insights, build data-driven applications, and share data.
Demand for its offering has been growing rapidly in recent years. This led to it generating over US$500 million in annualised revenue during the first half of 2020, up over 130% on the prior corresponding period.
Its IPO was well-supported, helping the company raise over US$3 billion to support its future growth.
Among those taking part in the IPO was Warren Buffett's Berkshire Hathaway. According to CNBC, it agreed to buy US$250 million worth of shares in the IPO and also a further 4 million shares via a secondary transaction.
Though, it is understood that Mr Buffett wasn't behind the investment. Rather, lieutenants Todd Combs and Ted Weschler are believed to have arranged the Snowflake bet.
Buffett famously has a distaste for public offerings and hasn't actually taken part in an IPO for almost 65 years. His last known IPO action came in 1956 when car giant Ford listed on the stock market.
In 2019, Buffett told CNBC: "In 54 years, I don't think Berkshire has ever bought a new issue. The idea of saying the best place in the world I could put my money is something where all the selling incentives are there, commissions are higher, the animal spirits are rising, that that's going to better than 1,000 other things I could buy where there is no similar enthusiasm. … Just doesn't make any sense."
Though, he may be very thankful that someone at Berkshire doesn't necessarily agree with this view after Snowflake's gains this week.
