Why Warren Buffett Bought into an IPO After 64 Years

“In the short run, the market is a voting machine but in the long run, it is a weighing machine.”

Image: Business Insider

His justification has always been to never buy something you don’t understand, meaning that if you fail to grasp how that business operates or generates its revenues and manages its expenses, then its too complicated and should be avoided at all costs.

According to a report published by CNBC, “the last time Buffett bought into such an IPO was in 1956 when he bought into the Ford Motors IPO”.

But what exactly does the company do?

That is their key motto. They provide a centralized data point for hundreds of remote workers, where they can run these data points and help their marketing or business development departments to optimize their business.

The stock was supposed to IPO between $75–85 but just prior to its launch the price was hiked to $110 a share. According to a CNBC report published on September 16th, “the shares surged more than 111% in its market debut on the New York Stock Exchange on Wednesday in the largest ever software IPO.

The stock began trading at $245 per share and closed at $253.93. A day earlier, Snowflake priced shares at $120, higher than the $100 to $110 range it estimated on Monday, and a huge bump from the $75 to $85 range it proposed last week”.

Image: David Marlin
Image: David Marlin
Image: Snowflake S-1 Filing

In general buying into an IPO at the very beginning still might do you more harm than good. With no P/E and inconsistent P/S, P/B, and detailed cash flow metrics predicting a company’s future growth potential is a tough ask.

I don’t know.

Image: Stitch Data



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