Berkshire Hathaway has offloaded nearly $1 billion in Snowflake stock as it exits the former IPO chart-smashing cloud data warehousing and analytics specialist.

According to a recent filing with the US Securities and Exchange Commission, the investment company run by Wall Street legend Warren Buffett now holds no stock in Snowflake, which achieved a $120 billion post-IPO valuation in 2020. In the first quarter of 2024, Berkshire Hathaway owned about $990 million in Snowflake stock.

Snowflake's share price took a hit after the news broke yesterday but has since recovered. It started the year strongly, with the share price rising to $235 in February, but it has since fallen to around $127.

Although Berkshire Hathaway did not disclose the reason for its about turn on Snowflake - it also reduced its holdings in Apple stock - the decision could be explained by the analytics company's bumpy ride over the last 12 months.

In late February, Snowflake's published financial results for calendar Q4 of 2024 failed to meet analysts' expectations, despite $774.7 million revenue, representing 32 percent annual growth.

Shares plunged 24 percent following the news, while CEO Frank Slootman - who took the company through its IPO - departed to be replaced by Sridhar Ramaswamy, previously Snowflake's senior VP of AI and former Google senior vice president.

In the first quarter of its 2025 financial year, Snowflake posted revenue of $828.7 million, up by a third on the same period a year earlier.

But the year got worse after Mandiant said cybercriminals stole a "significant volume of records" from Snowflake's customer database.

The fallout continues. Telecoms giant AT&T has been added to the long list of customers said to be affected. It's believed about 165 companies have had their internal data stolen from their individual Snowflake online database storage spaces.

The longer-term challenges for the company focus on its charging model. Late last year, Gartner noted in a report that Snowflake continued to lead the industry in terms of the "ease with which its analytical systems can be implemented and operated."

However, Gartner said it was still getting reports that users find it challenging to predict their Snowflake spending. The analyst said some clients were using financial operations (FinOps) vendors to help with the challenge, and Snowflake has partners in this space.

The Register has received anecdotal evidence of the problems with costing Snowflake usage. "Not only can they not explain this month's bill, they've no idea what the next month's bill will be," said one advisor.

Snowflake has been working on cost optimization. The effect emerged when high-profile customer Instacart, a grocery delivery platform and service, released data showing payments to Snowflake had fallen from $51 million during the year 2022 to $15 million for the year ending December 31, 2023.

At the time, Snowflake said the figures were misrepresented on social media and that the fall was not due to Instacart reducing its use of Snowflake products but, instead, resulted from "savings through optimization."

Nonetheless, if customers are able to reduce spending on Snowflake while effectively using the same products and service, it presents a quandary for the vendor in terms of revenue growth and margins. Perhaps that's something the Oracle of Omaha - Buffett's nickname owing to his seemingly prescient approach to investing - might have cottoned on to. ®

https://www.theregister.com//2024/08/16/warren_buffett_ditches_snowflake/