Warren Buffett Bought $250 Million of This Tech Company

Warren Buffett just invested in a cloud data management company, and it could be a massive sign for tech companies like Lightspeed POS.

| More on:
close-up photo of investor Warren Buffett

Image source: The Motley Fool

The Oracle of Omaha is not widely known for investing in tech companies. Warren Buffett is quite famous for investing only in businesses that he can understand. However reluctant he was to invest in the tech sector, Buffett did invest in Apple, but it was already massive by that time.

In a recent move during a time when Buffett has been unusually inactive, Buffett’s Berkshire Hathaway has announced that it has agreed to buy a hot tech initial public offering (IPO). Let’s take a look at the tech company and what the move could suggest for Canadian tech stocks like Lightspeed POS (TSX:LSPD)(NYSE:LSPD).

Berkshire making a risky move

Snowflake is the new tech IPO that Buffett’s company just allocated US$250 million to in the latest move. The cloud-based data-warehousing startup company filed its initial S-1 Registration Statement at the beginning of September 2020 and an amended version a week later. The company expected to raise approximately US$2.7 billion in fresh capital through the IPO.

Additionally, Snowflake announced that it would be conducting two concurrent private placements, and one of them is Buffett’s Berkshire Hathaway. According to the announcement, Berkshire would purchase US$250 million worth of its Class A common shares at a price per share equal to the IPO price. Snowflake is planning to register its shares at a price range between US$75 and US$85.

Based on the estimated share price, Buffett could own more than three million shares of Snowflake’s Class A common stock. Snowflake is no lightweight company. It has recently generated stratospheric revenue growth that is attracting investors.

A Canadian tech stock

While Buffett still has not expressed interest in Canadian tech stocks, Lightspeed POS also looks like a promising prospect for investors who want to leverage the tech industry boom. Lightspeed has grown 120% since March 8, 2019. The stock is up by more than 200% from its March low caused by the pandemic sell-off.

Lightspeed offers cloud-based point-of-sale solutions to retailers and restaurants. The onset of COVID-19 shuttered many of its clients’ businesses, and the lockdown took a toll on Lightspeed’s earnings. However, its recent launch of e-commerce offerings by adding features like online payments, Lightspeed Capital, and shipments helped the company revitalize itself.

The company is still in its early stages and relies on subscription fees for earnings. The company depends heavily on new customer acquisitions for revenue growth. Currently, the demand for its services is skyrocketing.

Foolish takeaway

As Lightspeed continues to strengthen its financial position and fund growth opportunities, it continues to look like an attractive high-growth stock to consider. Its IPO launch in the U.S. can further bolster Lightspeed’s position in the near future. I don’t know whether the Oracle of Omaha will ever decide to invest in the company, but it could be an explosive stock soon that you might want to consider adding to your portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. David Gardner owns shares of Apple. The Motley Fool owns shares of and recommends Apple and Berkshire Hathaway (B shares). The Motley Fool owns shares of Lightspeed POS Inc and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short September 2020 $200 calls on Berkshire Hathaway (B shares).

More on Dividend Stocks

Make a choice, path to success, sign
Dividend Stocks

Is Fortis Stock a Buy for its Dividend Yield?

Fortis has increased the dividend for 51 consecutive years.

Read more »

Middle aged man drinks coffee
Dividend Stocks

Is Brookfield Stock a Buy, Sell, or Hold for 2025?

BAM stock recently jumped after beating earnings. But is it still a buy, or is it better to wait?

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

3 Top Canadian Utility Stocks to Buy in November

Are you looking for some top Canadian utility stocks to own? Here's a look at three must-have options for any…

Read more »

View of high rise corporate buildings in the financial district of Toronto, Canada
Dividend Stocks

Is First Capital REIT a Buy for its 4.8% Yield?

First Capital is a REIT that offers you a tasty dividend yield of 4.8%. Is this TSX dividend stock a…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

TFSA Passive Income: 3 Stocks to Buy and Never Sell

Stocks like Fortis Inc (TSX:FTS) are worth holding long term.

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

Canadian Utility Stocks to Buy Now for Stable Returns

Given their regulated business, falling interest rates, and healthy growth prospects, these three Canadian utility stocks are ideal for earning…

Read more »

nuclear power plant
Dividend Stocks

The Best Canadian Stocks to Buy and Hold Forever in a TFSA

TFSA investors can buy and hold these Canadian stocks to generate above-average, tax-free returns over the next decade.

Read more »

Person holding a smartphone with a stock chart on screen
Dividend Stocks

Is Telus Stock a Buy for its 7.3% Dividend Yield?

Although the 7.3% dividend yield Telus offers is attractive, it's just one of many reasons why the telecom stock is…

Read more »