Snowflake IPOs today - a sign of Christmas coming early for investors?

The market is overvalued. This is 1999 all over again. Tech is too expensive and is due another correction. There are a plethora of commentators arguing that the market will pullback in the coming months amidst stretched valuations, Covid cases rising across many regions in the States and the small matter of a presidential election in seven weeks.

However, amidst these signs that this may a less than desirable time to list a company on the market, today sees the most eagerly awaited IPO of the year - cloud-based data storage company Snowflake. This is not only the largest IPO of the year but the biggest IPO in the US since Uber last year. Even Warren Buffett's Berkshire Hathaway has invested in this IPO alongside Salesforce - the first IPO Berkshire has been involved in since Ford in 1956.

Why is Snowflake so popular? Well first of all, it has a fast-growing client base including Sainsbury's, Deliveroo and Adobe - so fast in fact that revenue for Q2 was 121% higher than in Q2 2019. Customer retention is incredibly strong as well, a key metric in the SAAS business.

It isn't just Snowflake that is listing this week. 12 firms are to list with just 3 - Snowflake, Unity (Video game software) and Sumo Logic (Data software) making up just over 50% of the proceeds.

As the chart from the FT above shows, this is the busiest week for IPOs since early 2019. CEOs, instead of being concerned on market conditions, are attracted by current market valuations - especially in the software sector - as well as a backdrop of zero interest rates and aggressive quantitative easing. Listing ahead of a presidential election in November when volatility is likely to increase will also be on executives minds.

Regardless of whether we look back on this week as a smart or silly time for these companies to offer their shares to the public, there are strong arguments to both sides. But as we ponder whether the market is set for a leg higher or a pullback, this week of IPOs indicate that there are plenty in Corporate America who are feeling confident about the outlook.