Thread by @tapak7

Yesterday #snowflake IPO ~ $120. Closing share price ~ $250

Closing Mcap~ $70 bn
P/E: N/A
ttm P/S on close ~ 175x

By all reads / hears: Snowflake is a great biz & not a fly by night operator

So was Red Hat that did a IPO in 1999 : a short thread👇

In Aug '99 #RedHat went public. IPO~ $14. IPO day close~ $52.

Outstanding shares end August ~ 66.6 mn. ttm revenue ~ $13 mn. Loss making

So on IPO day close:

Mcap $3.5 bn
P/E: N/A
ttm P/S ~ 270x

By Nov/Dec the shares had touched ~ $140. Mcap > $10 bn

Due to exercise of ESOPS & conversion of preferred shares to common stock the total outstanding shares jumped to 153 mn by end Feb 2000

28 Feb 1999 shares were trading down at ~ $44. Mcap ~ $6.7 bn

Red Hat wasn't one of the many crappy companies that did an IPO in 1999. en.wikipedia.org/wiki/Red_Hat

from 1999 to 2108 its revenues went up ~ 275x a cagr of ~ 32%

it turned profit making & ended 2018 with almost $400mn profit

It was acquired by IBM in end 2018 for$34 bn

While company's biz grew at an amazing pace over years, the experience of shareholders was vastly different. Worst off were those who bought during 1st few months frenzy & held on - egged on by 'experts' confirming a 'new normal' :)

These folk took 12-18 yrs to break even !!

IPO boom of 1999 & subsequent bust was real. I See parallels in 2020. Many gr8 businesses r IPOing in US. eg #Snowflake. But frenzy causing absurd valuations. Fortunes may b made in short term. But if u don't get out in time & fall 4 'new normal' narratives - u will b minced meat

Some will give eg of Amazon: which even if bought at peak of '99 & held on, would've been a multi bagger

But remember: even Amazon crashed like mad in dot com bust

Patiently wait out a better price 2 buy gr8 cos that r currently at absurd valuations due to frenzy

That's it :)