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Shares of the cloud-computing company have nearly tripled since Sept. 15 with investors becoming enamored with its triple-digit revenue growth and potential to expand market share. That’s made Snowflake the best performing U.S. company to debut this year, excluding IPOs that raised less than $1 billion, according to data compiled by Bloomberg. The stock has fallen in two of the last three trading days since closing at a record $390 on Dec. 8 and more declines could be in the offing if insiders are tempted to cash in.
Snowflake’s gains have raised concerns that after adding more than $60 billion in market value, its valuation is getting overheated. On Friday, Deutsche Bank (DE:DBKGn) downgraded its rating to hold from buy, warning that a further rally is probably limited as investors seek to lock in gains at the end of the year. The stock fell 5.2% to close at $353.96.
“Any profit taking around the lockup expiry could be exaggerated by tight liquidity typical in late December and early January,” analyst Patrick Colville wrote in a research note.
Snowflake’s lockup expiration comes just three months after its debut, half the length that is typical following an IPO. Of the 22 analysts covering the San Mateo, California-based company, less than half recommend buying the stock. A Snowflake representative declined to comment.
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