- Salesforce placed a $250 million bet on Snowflake at the time of the software company's IPO in 2020.
- Salesforce sold most of its stake in 2021, but held onto about 5% of its holdings.
- As of the end of the first quarter, Salesforce owned no Snowflake shares, according to a filing, selling the rest as the market plunged.
Salesforce, which makes investments through its Salesforce Ventures unit, still owns a stake in five public companies, including Robinhood and Monday.com, the filing shows. The company had previously unloaded 95% of its Snowflake shares, reducing its holdings to $35 million worth at the end of 2021. Salesforce sold the remaining shares in the first quarter, when Snowflake plunged 32%.
While Salesforce hasn't yet reported results for its latest quarter, other big companies that also invest in their tech peers have racked up billions of dollars in losses from those holdings. Salesforce will similarly be required to reckon with mark-to-market accounting after notching investment gains of $3.38 billion over the last two years, when tech stocks were soaring.
Snowflake was a big investment of 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, investing alongside Warren Buffett's Berkshire Hathaway, which made a bet of equal size.
The IPO pop and subsequent rally sent Salesforce's stake past $520 million in short order. Salesforce had a similar fortune after investing in Zoom's IPO the prior year.
But everything in cloud software turned south in late 2021, as inflationary pressures and concerns over interest rates hammered the tech industry. Money-losing companies like Snowflake have been hit the hardest, while businesses that benefited from the pandemic boom in remote work are also coming to grips with a reopening of offices.
Still, Salesforce made a handsome return on its investment. The stock was priced at $120 in the IPO, and traded between $164.29 and $344 in the first quarter. Salesforce had already exited 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 it "tells the amazing story of how Snowflake reimagined the concept of a data warehouse, creating a truly innovative cloud platform."
Snowflake has continued to tumble since Salesforce sold out. The stock is down 53% so far this year, and on Wednesday fell to its lowest since the IPO. The shares rallied the past two days as tech stocks bounced back.
In late April Wolfe Research initiated coverage with the equivalent of a buy rating, saying Snowflake offers "a best-in-SaaS product" and noted that the stock is trading for "Black Friday prices."