The hype around cloud database developer Snowflake exploded on Wednesday, as the company’s shares more than doubled in value on their first day of trading after a high-profile initial public offering.
Snowflake raised $3.4 billion on Tuesday night by selling shares at $120 each, even higher than its Wall Street underwriters had anticipated. But when trading finally opened on Wednesday, with strong demand from the many investors who had not been able participate in the IPO, the price started at $245, spiked as high as $319, before closing near $254, up 112%.
That gives the eight-year-old startup that has never been profitable a market value of over $70 billion, making it the most valuable software company ever at the time of an IPO. And it is more than the stock market value of cloud software provider Workday or music service Spotify, and double the value of Twitter, all companies with substantially higher revenue.
Snowflake reported sales of $242 million in the first half of 2020, up 133% from the same period last year. But it also lost $171 million in the first half versus a loss of $177 million a year earlier. By contrast, Workday’s revenue hit $1.8 billion, up 24%, in the first half of 2020, as it lost $186 million.
The excitement comes as Snowflake appears to be one of the biggest winners in the business software sector as the market shifts to rely on cloud computing. Two of Snowflake’s founders worked at database giant Oracle for more than a decade before striking out on their own to create a new design for databases in the cloud.
Since then, the company has had great success attracting clients like Capital One, Office Depot, and DoorDash. It has been increasing revenue at triple-digit rates for years and last year was named the fastest-growing business application by number of users. Last week, Warren Buffett’s Berkshire Hathaway and Marc Benioff’s Salesforce agreed to invest $250 million each alongside the IPO.
Still, all of Snowflake’s customers must run the company’s apps on one of the three major cloud computing services, Amazon Web Services, Microsoft Azure, or Google Cloud. And all three of those tech giants also offer competing cloud database products, perhaps putting Snowflake at risk of getting squeezed out.
More must-read tech coverage from Fortune:
- Everything announced at Apple’s “Time Flies” event
- Microsoft hails success of its undersea data center experiment—and says it could have implications on dry land, too
- One country is now paying citizens to exercise with their Apple Watch
- Fortune’s 2020 40 Under 40
- Verizon plans to offer indoor 5G networks by year-end