Snowflake Shares Extend Slump Ahead of Lockup Expiration

Snowflake Inc. shares slumped ahead of a lockup expiration on Tuesday that will give company insiders their first chance to cash out since the initial public offering three months ago.

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 three of the last four 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 Shares Extend Slump Ahead of Lockup Expiration

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 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. Snowflake fell as much as 5.6% on Monday to $334.12. The stock is now down 13% from a record high.

“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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