Marc Benioff, president and co-chief executive officer of Salesforce.com Inc., speaks at the Dreamforce conference in San Francisco on November 19, 2019. Salesforce’s annual software conference, where he introduces new products and discusses his commitment to social causes , was interrupted for the second consecutive year by protests against the company’s work with the United States government.
David Paul Morris | Bloomberg | Getty Images
Salesforce, which makes investments through its Salesforce Ventures unit, still owns a stake in five corporations, including Robin Hood Other monday.com, the store shows. The company had previously dumped 95% of its Snowflake stock, reducing its holdings to $ 35 million at the end of 2021. Salesforce sold the remaining stock in the first quarter, when Snowflake plummeted 32%.
While Salesforce has yet to report results for the last quarter, other large companies that also invest in their technology peers have amassed billions of dollars in losses from those holdings. Likewise, Salesforce will have to contend with mark-to-market accounting after posting investment gains of $ 3.38 billion in the past two years, when tech stocks were skyrocketing.
Snowflake was a great investment by Salesforce at the time of the transaction. snowflakes debuted on the New York Stock Exchange in September 2020 in the largest software IPO ever made at the time. Salesforce bought 2.1 million shares in the IPO for $ 250 million, investing with Warren Buffett Berkshire Hathawaywho made a bet of equal size.
The pop IPO and subsequent rally took Salesforce’s stake to over $ 520 million in a short time. Salesforce had a similar fortune after investing in Zoom’s IPO the previous year.
But everything in cloud software fell apart in late 2021 as inflationary pressures and interest rate concerns hammered the tech sector. Money-losing companies like Snowflake have been the hardest hit, while companies that benefited from the pandemic boom in remote working are also facing reopening of offices.
However, Salesforce made a substantial return on investment. The stock was priced at $ 120 in the IPO and traded between $ 164.29 and $ 344 in the first quarter. Salesforce had already abandoned most of its position by mid-2021, selling when the stock was mostly trading well over $ 200.
A Salesforce representative did not immediately respond to a request for comment.
In a show of support for Snowflake CEO Frank Slootman, Salesforce Co-CEO Marc Benioff provided a blurb for Slootman’s book, “Rise of the Data Cloud”. Benioff said he “tells the amazing story of how Snowflake reinvented the concept of the data warehouse, creating a truly innovative cloud platform.”
Snowflake has continued to fall since Salesforce sold out. The stock has fallen 53% so far this year and fell to a low since the IPO on Wednesday. Stocks have risen over the past couple of days as tech stocks have rebounded.
In late April Wolfe Research began hedging with the equivalent of a buy rating, saying Snowflake offers “a better SaaS product” and noted that the stock is trading for “Black Friday prices”.