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This week in IPO's; Snowflake and Unity

Yahoo Finance’s On the Move panel discuss the latest IPO's Snowflake and Unity.

Video Transcript

JULIE HYMAN: Well, we are still sort of assessing the week in IPOs, particularly the IPO of Snowflake earlier in the week. We're also watching the IPO of Unity today. And this morning, "The First Trade" talked to Frank Slootman, who is the CEO of Snowflake. He talked about why the IPO was the right path for them instead of a direct listing.

FRANK SLOOTMAN: There's two aspects that are important in an IPO, one is when you're raising money. In a DL, you're not raising any money, and we were going to raise money. And the second reason is that we wanted to assemble a very specific institutional ownership of the company. This was not going to be a free-for-all where anybody could just, you know, buy shares, that we're just going to offer to the highest bidder. And we've literally, you know, spent the last year, you know, very gradually bringing along that institutional ownership, gradually increasing their holdings for them to be big buyers in the IPO and as well as in the aftermarket.

JULIE HYMAN: And he's had some experience in all of this because this is the third company that he has brought to the public markets. At the same time, we're watching Unity today. Those shares are also spiking in their IPO. That's a game-developer platform, although not spiking as much as Snowflake did earlier in the week, right? But still, something to watch. And we should mention, by the way, the CEO of Unity, John Riccitiello, is going to be on "The Final Round" later today.

Dan Howley, I know you like to talk gaming. This unity the IPO is one that kind of snuck up on us, but it's a big one. And how important is it in this sort of game development community?

DAN HOWLEY: So Unity, you can think about it similar to Epic Games, right? Epic Games creates Fortnite. Fortnite is based on the Epic Games engine. And that's really what Unity is. It's the developer of a game engine. And just to kind of give you an idea-- this is the way I described it earlier is they basically-- when these companies make these game engines, they give you all of the toys that you need to create a game and just dump it on the floor, and then it's up to the developers to then go ahead and take all of those toys and create the game that ends up being shipped out to consumers.

Now, with Unity, it's free to a point. At a certain revenue point that companies are able to generate using the Unity engine, they start paying Unity for the software. And that's kind of where they build up into-- you know, indie developers start using it. They gain traction then big name studios like EA and Take-Two start using it. They gain traction and so on and so on and so on.

Now, I think that's something like a Unity and an Epic are really the two largest engines out there right now. And they seem to be so user friendly that they don't appear to be going anywhere anytime soon. And it's important to note, the game industry now-- and I may be biased because I'm a massive nerd and gamer-- is the largest form of entertainment as far as revenue generated. So it beats books-- unfortunately, for all my teachers told me not to play video games when I was a kid-- movies, TV shows. It really is massive. It's only going to get larger.

So for Unity to IPO now, you know, it's sort of a strange time just because of how the market's been reacting. And it's not a money-making venture yet, and we've seen what can happen to tech companies that go public in that fashion-- you know, the biggest ones, Uber and Lyft, not-- still not doing so hot. So it remains to be seen how much more they can push forward. But you know, I think as far as the safety of the business itself, it really does appear to be there.