Salesforce dumped Snowflake shares into market decline in Q1 2022

Marc Benioff, chairman 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 it introduces new products and discusses its commitment to social causes, was interrupted for the second year in a row by protests against the company’s work with the US government.

David Paul Morris | Bloomberg | Getty Images

Salesforce has sold the last of its shares in data analytics software maker Snowflake, according to a regulatory filing on Friday.

Salesforce, which makes investments through its Salesforce Ventures unit, still owns a stake in five public companies, including Robinhood and Monday.com, the files show. The company had previously redeemed 95% of its Snowflake shares, dropping it to $35 million by the end of 2021. Salesforce sold the remaining shares in the first quarter, when Snowflake fell 32%.

While Salesforce hasn’t reported results for the latest quarter yet, other major companies that also invest in their tech peers have made billions of dollars in losses on those holdings. Similarly, Salesforce will have to factor in mark-to-market accounting after capitalizing $3.38 billion in the past two years as technology stocks soared.

Snowflake was a major investment from Salesforce at the time of the transaction. Snowflake debuted on the New York Stock Exchange in September 2020 in the largest software IPO ever at the time. Salesforce bought 2.1 million shares in the IPO for $250 million and co-invested with Warren Buffett’s Berkshire Hathaway, who made an equal-sized bet.

The IPO pop and the rally that followed saw Salesforce’s stake exceed $520 million in a short space of time. Salesforce had a similar fortune after investing in Zoom’s IPO last year.

But everything in cloud software turned south in late 2021, as inflationary pressures and concerns about interest rates plagued the tech industry. Money-losing companies like Snowflake have been hardest hit, while companies that have benefited from the pandemic boom in remote working are also getting a handle on the reopening of offices.

Still, Salesforce made a nice return on its investment. The stock was priced at $120 at the IPO and traded between $164.29 and $344 in the first quarter. Salesforce had already exited most of its position by mid-2021 and sold when the stock typically traded well above $200.

A representative from Salesforce did not immediately respond to a request for comment.

In a show of support for Snowflake CEO Frank Slootman, Marc Benioff, co-CEO of Salesforce, provided a blurb for Slootman’s book, “Rise of the Data Cloud.” Benioff said it “tells the amazing story of how Snowflake reimagined the concept of a data warehouse and created a truly innovative cloud platform.”

Snowflake has continued to tumble since Salesforce sold out. The stock is down 53% so far this year, falling to its lowest level since the IPO on Wednesday. Shares have surged in the past two days as technology stocks bounced back.

In late April, Wolfe Research kicked off coverage with the equivalent of a buy recommendation, saying Snowflake offers “a best-in-SaaS product” and noting that the stock is trading at “Black Friday prices.”

WATCH: Why Citi’s Tyler Radke Says It’s Time To Be Selective With Software Stocks

Leave a Reply

Your email address will not be published.