Salesforce dumped Snowflake stock in the wake of the market slump in Q1 2022

Marc Benioff, Chairman and Co-CEO of Salesforce.com Inc., speaks at the Dreamforce conference in San Francisco on November 19, 2019. Salesforce’s annual software conference, which showcases new products and discusses its commitment to community causes, was punctuated for the second year in a row by protests against the company’s cooperation with the US government.

David Paul Morris | Bloomberg | Getty Images

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

Salesforce, which invests through its Salesforce Ventures unit, still owns stakes in five public companies, including Robinhood and Monday.com, the filing shows. The company previously sold 95% of its Snowflake shares, reducing its holdings to $35 million by the end of 2021. Salesforce sold its remaining shares in the first quarter as Snowflake plummeted 32%.

While Salesforce hasn’t reported earnings for its most recent quarter, other large companies that also invest in their technology peers have reaped billions of dollars in losses from those holdings. Salesforce is also facing mark-to-market accounting, having posted $3.38 billion in capital gains over the past two years as tech stocks soared.

Snowflake was a large Salesforce investment at the time of the transaction. Snowflake debuted on the New York Stock Exchange in September 2020 with what was then the largest software IPO of all time. Salesforce bought 2.1 million shares for $250 million in the IPO, investing alongside Warren Buffett’s Berkshire Hathaway, which made a bet of the same amount.

The IPO and subsequent rally quickly took Salesforce’s stake past $520 million. Salesforce had similar fortunes after investing in Zoom’s IPO the year before.

But everything in cloud software turned south in late 2021 as inflationary pressures and interest rate concerns stalked the tech industry. Money-losing companies like Snowflake have been hit hardest, while companies that have benefited from the pandemic boom in remote work are also coping with office reopening.

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

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

As 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 and created a truly innovative cloud platform.”

Snowflake has continued to fall since Salesforce sold out. The stock is down 53% so far this year, falling to its lowest level since its IPO on Wednesday. Stocks rallied over the past two days as technology stocks rallied.

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

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https://www.cnbc.com/2022/05/13/salesforce-dumped-snowflake-shares-in-q1-2022-market-plunge.html Salesforce dumped Snowflake stock in the wake of the market slump in Q1 2022

Chrissy Callahan

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