Snowflake Reportedly Eyeing RedPanda. Would Deal Impact Confluent?
Snowflake (SNOW) is in talks to acquire privately-held RedPanda as it continues to build up its AI products, according to a report. Shares of Snowflake fell on Thursday on the news.
RedPanda offers a streaming data platform that is a rival to Confluent (CFLT). An acquisition of RedPanda by Snowflake could valued at around $1.5 billion, a report in Information says.
“This acquisition would essentially be a accelerator for Snowflake's generative AI strategy and not a way to move into the traditional data streaming area and fight/attempt to unseat Confluent on the enterprise level,” explained an analyst at RBC Capital Markets, Matthew Hedberg, in a research note.
In the stock market today, shares of Snowflake opened lower by around 2% to $179.25, while Confluent’s shares also fell more than 2% to $29.21. Over the past year, SNOW stock has gained 18% while Confluent stock has risen 7%.
“We would view the potential RedPanda acquisition as a good fit for Snowflake, whose current technology stack already includes data streaming, but this deal could enhance its technology and roadmap goals and help it enhance its capability to support the real-time data streaming required by generative AI,” Hedberg wrote.
“Acquiring RedPanda might also help Snowflake strengthen its position in the market and become more challenging to Databricks, which also offers data streaming features.”
The Texas-based company sells data analytics and management software that operates on the cloud computing platforms of Amazon.com (AMZN), Microsoft (MSFT) and Alphabet’s (GOOGL) Google.
The new CEO of Snowflake, Sridhar Ramaswamy, was the founder of an AI startup Neeva which Snowflake had acquired in 2023.
Currently, Snowflake stock has a IBD Composite Rating of 73 out of 99 according to IBD Stock Checkup. The Composite Rating is IBD's combined rating of key fundamental and technical metrics to assist investors in identifying the strength of a stock. Top growth stocks typically have a Composite Rating of 90 or higher.
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