What market selloff?
Despite last week’s market declines, two big IPOs are rolling ahead this week, with Snowflake and JFrog both boosting their IPO price ranges this morning. The jump in expected pricing means each IPO will likely raise more capital, valuing the firms more richly than their initial ranges made clear.
Snowflake’s first IPO range valued it comfortably north of $24 billion and its IPO detailed that both Berkshire Hathaway and Salesforce Ventures were going to pour capital into the big-data company. JFrog’s developer-derived profits and strong growth gave it a valuation of around $3 billion, far above its final private price.
Those figures are are now passé. This morning, let’s quickly calculate new valuations for both companies and dig into why they are managing to attract such strong investor demand.
JFrog and Snowflake’s new IPO price intervals
Starting with JFrog, the company’s preceding IPO price interval of $33 to $37 per share valued it between $2.92 billion to $3.28 billion, not counting equity reserved for its underwriting banks. The company is now targeting a $39 to $41 per-share price range, a steep gain from its preceding target.
JFrog still intends to sell eight million shares, giving the company a $312 million to $328 million gross raise, before counting other shares that are being sold by existing shareholders and reserved equity for underwriters.
The company’s total share count post-IPO exclusive of shares allotted to participating banks would be 88,675,175, giving it a valuation range of $3.46 billion to $3.64 billion. Including the 1,735,232 shares that JFrog’s underwriters may purchase, its valuation rises to $3.53 billion to $3.71 billion.
As the company was last valued at $1 billion in 2018, any of those numbers would constitute a win.
Our read: A recent quarterly profit and a healthy growth rate have made JFrog an attractive place to put cash to work. The company is also free cash-flow positive, meaning that its rule of 40 results are strong. Everyone can understand that.
Turning to Snowflake, an IPO that, when it finally comes together, will be an event, let’s get its new valuations together.
Snowflake’s $75 to $85 per-share IPO price target valued it at $20.9 billion and $23.7 billion, not including some extra buys of its shares by other parties (executed at the IPO price). The firm now anticipates a $100 to $110 per-share price, boosting both its valuation and its expected IPO raise.
With 277,290,066 shares outstanding after the IPO, the “concurrent private placements and the secondary transaction” from one of its shareholders, Snowflake would be worth $27.73 billion to $30.5 billion.
The company was last valued at around $12.5 billion when it raised a Series G worth $479 million earlier this year. So, even its most recent investors should do well by holding their equity through the IPO.
Our read: The scuttlebutt around Snowflake is that it’s a breakout enterprise company that is going to become a key player in the long-term future of data, writ large. That and its epic growth and falling losses make it an attractive debut. That means competition, and higher prices.
Stocks fell last week but they are back up again today, with tech shares rebounding sharply by nearly 2%. With both Snowflake and JFrog expected to price tomorrow and trade Wednesday, it’s going to be a busy week but one that, for the two firms at least, is starting off on the right foot.
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