I have news today on some of the big upcoming IPOs including Snowflake, JFrog and Palantir.
Things were slow as far as new companies going public this week…but that’s not gonna
last. Labor Day is past us, now the real work begins!
…. Welcome to the Healthy, Wealthy, and Wise
channel where we have evolved to talk about ALL the companies going public, whether it’s
by a traditional IPO, a SPAC or a direct listing. As part of that coverage, we have a weekly
featured program called IPO This Week where we talk about every company going public for
the upcoming week as well all the IPO lock up and notable quiet period expirations. For
this week’s episode, because we had no traditional IPOs starting to trade….and I needed something
to talk about, we took a little glance into the near future and looked at some of the
biggest names out there in the pipeline: Airbnb, Snowflake, and Palantir. And wow, did that
episode do well…becoming the most popular video I’ve posted to date and bringing in
well over a thousand new subscribers in just two days. Whether you’re new to the channel
or you’ve been with me for awhile, I just want to thank you for joining the community…it’s
always great for me when someone watches one of my videos and realizes that I’m not a
fan of, or trying to push you on a particular company, that I’m not making any pie-in-the
sky recommendations or price targets, and yet they still subscribe because they value
me just researching and sharing the information in an easy to understand and concise way.
And also sprinkling in some of my own personal thoughts here and there. So again, thank you
for all of your support and the great discussions we’ve been having in the comments.
For today, I knew I would need to talk about some news that came out after I recorded IPO
This Week. We had updates to 2 companies with a lot of investor interest setting the pricing
expectations for their IPOs, those companies being Snowflake and JFrog. And then we also
had Palantir hold their investor day live stream and release another amended filing.
I’ll give you a brief overview of the live stream and what I found interesting and then
also share with you how you can watch the replay if you missed it and still want to
see it. And probably the thing that you will be most interested in is that I give you some
big news on when they plan to start trading. Yes, I’ll give you a date right from Palantir,
so hang on for that! But first, I’ll give you a quick update
on the SPAC we talked about going public this week. And that was for Industrial Tech Acquisitions,
a blank check company that plans to acquire an industrial or energy focused technology
business. The SPAC was priced for its IPO at $10 per unit. They began trading today
under the ticker ITACU and they opened and spent the day trading just under that $10
price, settling at $9.97 at close. We’ll see how that price goes once the company finds
and announces a merger target. Just a quick reminder that I’m not a financial
advisor and while this video is meant to be informative, it should not be seen as a recommendation
for you to take any action on the companies covered—you should always do your own research
or consult with your own financial advisor when making any investment decision.
So onto two highly anticipated companies looking to IPO soon, keep in mind, I don’t have
exact dates but now that they have announced terms, we’re another step closer to them
going public. If you have your notification bell turned on, you’ll know as soon as I
have that information because, well, I’ll post it…another good reason to be subscribed
to the channel. So let’s start with JFrog. For those of
you not familiar with the company, JFrog is another one of the companies looking to go
public with tech-heavy credentials. The company is one that sells software tools that help
to streamline app development. JFrog was founded in 2008 with the mission to develop an integrated
and full-features system to enable software development and IT operations teams to more
quickly and easily develop and deploy new software releases. In their filing, they talk
about how they built the world’s first universal package repository named JFrog Artifactory
to fundamentally transform the way that the software release cycle is managed. They state
that their package-based approach to releasing software allows releases to be continuous
and software to always be current. From theStreet.com, recent financial data was summarized as JFrog
having sharp growth in top line revenue, increasing gross profit and high but variable gross margin,
nearly breakeven operating loss and increasing cash flow from operations.
The company is based in Israel and incorporated in California. In their amended S-1 filing
released this week, JFrog plans to raise $405 million by offering 11.6 million shares at
a price range of $33 to $37. At the midpoint of the proposed range, which would be $35,
JFrog would command a fully diluted market value of $3.5 billion. The company plans to
list on the Nasdaq under the symbol FROG. We’ll talk more about the company as it
gets closer to the actual IPO. The second company that has set its terms
is one we’ve talked about in a couple of videos on the channel and that is Snowflake.
I am not going to repeat anything from those videos today so if you’ve already seen them,
you don’t have to hear the same things over and over, but if you haven’t seen them,
I will link them in the description if you are looking for more information on the background
of the company and some of its recent financial data. This is one of those companies that
there is a lot of interest in, so as we get closer to trading, I’ll post a comprehensive
video on the company that will also include me sharing my own thoughts for the first time
on investing in the company. So the latest from the cloud data warehousing
company is that they have set the terms for their IPO. Snowflake plans to raise $2.2 billion
by offering 28 million shares at a price range of $75 to $85.
While price doesn’t equal value, how many of you all of sudden felt that the stock may
be pricier than you thought it would be…let me know in the comments what you think about
the expected price and if that affects your strategy of buying in.
At the midpoint of the proposed range, Snowflake would command a fully diluted market value
of $28.2 billion. At pricing, Snowflake would be the largest-ever IPO of a software seller,
both in terms of proceeds raised and IPO market cap.
So that’s the pricing, now here’s where it gets really interesting; this is from the
amended S-1 filing, “Immediately subsequent to the closing of this offering, and subject
to certain conditions of closing as described in the section titled “Concurrent Private
Placements,” each of Salesforce Ventures LLC and Berkshire Hathaway Inc. will purchase
$250 million of our Class A common stock from us in a private placement at a price per share
equal to the initial public offering price. Based on an assumed initial public offering
price of $80.00 per share, which is the midpoint of the price range set forth on the cover
page of this prospectus, each of Salesforce Ventures LLC and Berkshire Hathaway Inc. would
purchase 3,125,000 shares of our Class A common stock.
Jumping ahead, In addition, Berkshire Hathaway Inc. has agreed
to purchase 4,042,043 shares of our Class A common stock from one of our stockholders
in a secondary transaction at a price per share equal to the initial public offering
price that will close immediately subsequent to the closing of this offering.
So what this means is that the company plans to raise an additional $500 million in concurrent
private placements to Salesforce Ventures and Berkshire Hathaway, yes, the same Berkshire
Hathaway that made Warren Buffett a household name and vice versa. And with that secondary
transaction, Berkshire will end up having much more than the $250 million invested from
the first transaction. Now Buffett always says to invest in what you know; I’m not
sure how much he knows about the cloud and data warehousing, but he knows huge growth
when he sees it. This announcement will only make Snowflake more attractive than it already
is. Again, I don’t have a date yet, but stay tuned to the channel and I’ll let you
know when I have it. Now let’s jump to Palantir and some big
news. Today they held their Investor Day presentation on a live stream in which I was able to attend,
and on that live stream, they did have one particular piece of information that I was
hoping to hear about, and that was some data on what the stock was trading for in the private
markets; I’ll get to that in a minute. Overall, I have to say, the presentation was what I
expected in that they shared a lot of information that was already in the S-1 filing and knowing
that this obviously was meant to be a promotional event. That meant, of course, that they didn’t
address some of the more controversial aspects of their upcoming direct listing such as the
corporate governance structure regarding the special class F shares that we talked about
on IPO This Week; that wasn’t addressed in any detail, as well as the amended filing
stating that the company could be a controlled company, although after looking at it, it
almost is a certainty that they will function as controlled company where public investors
will have no legal say in the direction of the company. Remember, they’re doing a direct
listing versus a traditional IPO and they aren’t offering any new shares, they’re
just letting current private investors and employees with shares to be able to sell them.
One thing unique with their direct listing is that they will have lock up shares which
isn’t typical for companies going the direct listing route. From the CFO, only 20% of existing
shares and options can be traded freely on the first day of trading. Which reminds me,
I get a lot of questions on the date of the stock trading, and while most of the time,
I don’t have anything official because these things are very fluid. But I do have something
to share with you today; according to their most recently amended S-1 filing; Palantir,
who will trade under the ticker PLTR, has announced that it plans to start trading on
September 23rdon the New York Stock Exchange. So there’s some breaking news for you---if
you liked that, you know what to do (thumbs up). Back to the share lock ups, for the remaining
80% of shares, they will become available on the third business day following the release
of fiscal year 2020 earnings. So when this year’s earnings come out, we could see more
volatility in the share price when those 80% of shares are finally able to hit the market.
If you want more information on lock up expirations, check out a video I did on IPO basics and
how I applied them to Albertsons Companies, the grocery company that went public this
summer; I’ll link it for you. As far as the live stream, the information I found most
beneficial was to see how the stock had been trading amongst private investors. You can
see for most of the year, the stock was trading around the $5 mark, but over the last 2 months,
it’s trended significantly higher, with the volume weighted average price being $7.31
for August, no doubt due to anticipation of the company going public. On the last day
of secondary trading, which was on Sept. 1, the average price was up to $9.17. These numbers
are good to know to have a reference of what the stock might be worth, but keep in mind
that there will be, almost without a doubt, a premium to that price once it trades publically
for the first time because of all the interest out there.
So if you missed the live stream, why might you want to watch it? Well, if you’re still
learning about the company, its products and what they do, it will be helpful in getting
a better understanding. There’s also a benefit of hearing the performance numbers of the
company from people as compared to just reading them from filing. And by watching a lot of
different people of the company, you get a better idea of the culture that is there.
If you want to watch a replay of the event, you can see it at vimeo.com/palantir. It’s
just 2 hours long and to give you an idea of what’s on it, the first 47 minutes are
the numbers and information from the company’s leadership. From about that 47 minute mark
on, and for about the next hour, you hear from people that work for the company. And
then the last 15 to 20 minutes you’ll hear from co-founder and CEO, Alex Karp. So if
you’re on the fence and want to learn more about the company, check it out…just remember
it’s a promotional event so there’s a definite rah-rah factor here. Before it starts
to trade, I’ll definitely share my own personal thoughts on the pros and cons for investing
in the company so stay tuned for that. Let’s wrap it here for now….but don’t
worry, I’ll have more for you soon. I hope you enjoyed the video, and if you did, please
push that like button and share with your friends and on any of your social media sites
and forums you’re on—anything you can do to help me grow the channel, will allow
me to justify putting more resources towards it. And if you’re new to the channel or
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Thank you for watching and, until next time, have a great day!