Learn how to invest in Databricks stock when the IPO arrives. Increase your chances of receiving an allocation by opening an account with a commission-free broker that offers IPO investing to eligible customers. Long-term buy and hold investors may prefer M1 Finance.
Latest Databricks Stock IPO News
04/08/2021: How Databricks CEO And Cofounder Bet Big On The Cloud To Build A $28B Company
02/17/2021: Databricks adds support for Google Cloud as it prepares to go public
02/01/2021: UiPath and Databricks set the stage for direct listings with huge funding rounds
02/01/2021: Amazon, Alphabet, and Salesforce are all investing in a $28 billion company that crunches big data
10/23/2020: Microsoft-backed Databricks Plans IPO Next Year
What is Databricks?
Databricks is a data science and artificial intelligence cloud and web-based software service. The company is on a mission to simplify and democratize data and AI, helping data teams solve the world’s toughest problems.
Its primary product is a web-enabled Unified Data Platform that empowers data engineers at Fortune 500 companies to import massive amounts of data from existing sources, then compile the data to provide business intelligence.
Understanding enterprise data optimizes operations and helps companies stay one step ahead of competitors.
In terms of what this company actually does, most people aren’t going to understand. The main takeaway is that data analytics is an extraordinary long-term trend over the decades to come, positioning Databricks to ride the wave.
Notably, the world’s biggest data companies use its products and have made private investments in the company (see next section).
Databricks was founded by the original creators of Apache Spark, an open-source data analytics engine for large-scale processing. The company is headquartered in San Francisco.
Here’s a brief video explaining what the company does:
Is Databricks Stock Publicly Traded?
No, Databricks is still privately owned. The shareholders include founders, early investors (venture capital firms), and employees.
You can find a current list of Databricks investors at Crunchbase.
Databricks has raised at least $1.9 billion in private financing since its founding.
Prominent investors include Fidelity, Microsoft, Amazon, CapitalG, Salesforce Ventures, Tiger Global, Andreesen Horowitz, Blackrock, and New Enterprise Associates.
When is the Databricks IPO Date?
The Databricks IPO date is currently unknown. There is speculation that the Databricks IPO date could be sometime during the first half of 2021, according to Bloomberg.
Its January 2021 $1 billion funding round values the company at about $28 billion and proves that Databricks can raise funds privately to sustain operations ahead of an IPO.
CNBC reported this statement from Databricks CEO Ali Ghodsi on February 1st:
“All options are on the table,” Ghodsi said. He added that a public listing is likely this year but for now he’s taking advantage of private capital because “I can get all the benefits without even going public.” CNBC added, Databricks CEO Ali Ghodsi told CNBC after the funding announcement that his company is considering a direct listing but hasn’t made a decision.
We won’t get a better sense of when the Databricks IPO will be until one of two things happens:
- The Databricks IPO date range leaks to the financial press
- The SEC releases a publicly-available Databricks S-1 filing
We may get clues, such as when Databricks selects a lead underwriter for the IPO or announces a confidential filing. Those types of announcements would indicate the IPO is within six to twelve months.
Even when the company and SEC publicly release the S-1 filing, we still won’t know a firm date. However, the IPO date typically occurs a month or so after the S-1 is released to the public.
Bookmark this page for the latest Databricks IPO news.
Will There be a Databricks SPAC Acquisition?
A SPAC is a special purpose acquisition company, also known as a blank check company. They are shell companies designed to help established businesses go public without a traditional IPO.
The SPAC company merges with the established company and takes on the established company’s name. It’s also known as a reverse merger.
SPACs have become popular recently after Virgin Galactic, Lordstown Motors, and Nikola used them to become publicly traded companies.
At a $28 billion valuation, it seems more likely Databricks will follow a traditional or direct listing model, which aligns with an October 23rd report by Bloomberg (see News section above).
Using a SPAC to go public allows the company to skip the complicated and expensive IPO process. SPAC founders call companies like Databricks to convince them it would be a smart move.
Not all companies are ready to IPO, making SPACs an attractive alternative to an IPO where the company can still raise new funds.
However, the more established a company is, the more resources it can hire to facilitate the traditional IPO process.
When early investors and employees need liquidity, and the company generates more significant revenue, the company will decide on the best way to go public — a traditional IPO, direct IPO, or SPAC merger.
What is the Databricks Stock Price?
Since Databricks is not publicly traded on a stock exchange, there is no Databricks stock price yet.
The company and its underwriters won’t publicize an estimated IPO price range until after the initial S-1 filing is made with the Securities and Exchange Commission (SEC).
What is the Databricks Stock Symbol? Databricks Ticker?
Databricks has not yet submitted public filings to the SEC. Therefore, it is not yet known what the Databricks stock symbol will be. We can only speculate.
Here are two possibilities that appear to be available in the U.S.:
- DATA
- BRCK
Will Databricks Stock be a Motley Fool Stock Advisor Recommendation?
We won’t know until after the IPO if Databricks will be a Motley Fool Stock Advisor recommendation. However, Databricks fits the mold of high-growth, disruptive business models that the Fool typically recommends.
Data analytics and big data are top trends for the foreseeable future.
When the Motley Fool recommends a company, there is usually an immediate spike in the price. Fool newsletter subscribers are notoriously long-term minded and rarely sell, meaning the stock price will continue to rise.
Databricks may also receive a recommendation by the Motley Fool Rule Breakers newsletter or other premium services. Both services have handily beaten the broader market since the early 2000s.
Read this Motley Fool Stock Advisor review to learn about the stock selection methodology and about how you can participate in excellent returns.
Stock Advisor is currently half-off at just $99 for an annual subscription.
Can you Invest in Databricks Stock? Three Potential Ways
Generally, it’s challenging to acquire shares of high demand IPOs. Most investors will need to settle for buying the stock after it begins trading.
IPO underwriters typically give their best customers access first, then allocate shares to certain institutions and brokers often tied by professional relationships.
When the largest brokers receive IPO shares, they divvy them up amongst their eligible customers, prioritizing their most valued customers first (wealthiest).
For high-demand deals, most investors will not get shares.
In recent years, a few brokers have partnered with the IPO investing app ClickIPO to give access to individual investors based on a proprietary rating instead of assets under management.
The ClickIPO rating, known as the Investor Score, rates higher those investors who hold IPO shares instead of flipping them.
Though ClickIPO has not demonstrated the ability to allocate app users with high-demand IPO shares, they’ve executed dozens of lesser-known IPOs on its platform.
For individual investors without a high net worth, ClickIPO and its partner brokers TradeStation and Webull are the most likely chance of participating in IPOs since the demise of LOYAL3 and Motif Investing.
With that, here are three potential ways to own Databricks Stock:
- Buy Databricks stock after it begins trading
- Buy Databricks stock in the Databricks IPO through a broker
- Attempt to acquire Databricks stock in pre-IPO secondary marketplaces before the IPO
1. Buy Databricks stock after the Databricks IPO
Since acquiring IPO shares is almost always challenging for individual investors, the easiest way to own Databricks stock is to wait for the IPO to complete.
Realistically, unless your brokerage account is worth more than $1 million and your broker regularly receives IPO allocations, you are unlikely to get in on high-demand IPOs.
In some cases, patient investors can buy the stock at or below the IPO price. This is not always true.
The Beyond Meat IPO, for example, soared and never looked back. But Uber, which many predicted to rise steeply, actually fell on the IPO date.
Spending significant effort to acquire IPO shares may not be worth it in the end. You may also spend time and effort to obtain shares but only receive a small allocation, limiting upside gain.
Though IPOs can provide one-day gains north of 20%, even up to 100% in rare cases (such as Airbnb and Doordash), the most significant gains will come during the decade following the IPO if the company is genuinely disruptive.
Take, for example, Netflix, Amazon, or Tesla. You could have bought the stock years after the IPO and still experienced gains of more than 1,000%
If you’re an investor that wants to buy Databricks stock for the long-term, consider opening a position after the IPO and averaging down if the stock falls.
Short-term traders may angle to acquire IPO shares and hope for a short-term pop.
2. Buy Databricks stock in the Databricks IPO through a broker
Ambitious investors can position themselves to invest in the Databricks IPO once it arrives.
Your chances of getting IPO shares depends on four factors:
- IPO demand
- Your broker and eligibility
- Your assets under management (AUM) at the broker
- Propensity to flip shares
As IPO demand increases, the chances of receiving IPO shares decreases. Therefore, the IPOs that are most interesting to the masses are the hardest to access.
Most online brokers do not offer IPO shares. Check directly to see if yours does, or look at our list of best brokers for IPO investing.
Legacy brokers, such as Fidelity and Charles Schwab, have minimum eligibility requirements and penalties for flipping shares (selling shortly after the IPO).
But even if eligible, the brokers must sub-allocate whatever limited shares they receive from the IPO underwriters.
This process is non-transparent, but priority is likely given to the wealthiest investors first.
For example, if your account balance is $500,000, and that makes you eligible according to terms, the broker may only have enough IPO shares to distribute to customers with assets of $3,000,000 or more.
This brings us to ClickIPO.
ClickIPO is a smartphone app that partners with TradeStation (through the app) and Webull (directly) to deliver IPO access to ordinary investors.
There is no minimum account value required.
ClickIPO prioritizes IPO share distribution by its Investor Score, which measures how likely an investor is to flip shares. Investors more likely to flip shares are considered to be less desirable IPO beneficiaries (in theory).
Therefore, ClickIPO offers a value proposition to underwriters and newly public companies.
Though quick profits from IPOs is one way the large underwriter reward whale-sized clients.
Click here to subscribe to Access IPOs and download the free 15-page eBook, How to Invest in IPOs – A Fundamental Guide for Ordinary Investors, which provides more detail on this dynamic.
Joining a broker that offers access to IPOs does not guarantee a share allocation, especially in high-demand IPOs. You are probably better off waiting for the company to start trading after the IPO.
3. Attempted to acquire shares in pre-IPO secondary marketplaces
Founders, early employees, and investors often find themselves in a difficult predicament. They own valuable shares of a company that doesn’t trade publicly.
These shareholders might have multi-million dollar net worth’s because of their stock holdings, but the stock is not liquid because it doesn’t trade on an exchange.
A few platforms have evolved to gives these individuals a way to liquidate their holding before the IPO. Two of the more prominent sites are EquityZen and Sharespost.
Both sites bring liquidity to an otherwise illiquid asset. Accredited investors (those with invested assets > $1,000,000) may join these sites and attempt to buy these companies’ shares when they become available.
The shares are only offered to accredited investors because the company’s financials are not publicly filed with regulators yet, increasing the investors’ risk.
For high-profile companies, demand is high, lowering your chances of acquiring shares. The author considers this a low-likelihood way to acquire shares. However, some readers have written with success stories buying shares this way.
Where can I find the Databricks S-1 Filing?
The Databricks S-1 filing won’t be publicly available until released. Once it is public, we’ll post it here.
You can find a real-time SEC feed of the latest IPO filings from other companies on the recent S-1 filings page.
Best Brokers to Buy Databricks Stock
What is the best online brokerage for buying Databricks stock?
If you want to attempt to participate in the IPO, TradeStation and Webull are the best low-minimum investment IPO brokers for investors with assets under $100,000.
See the complete list of best brokers for IPO investing here.
Joining a broker that offers access to IPOs does not guarantee a share allocation, especially in high-demand IPOs. You are probably better off waiting for the company to start trading after the IPO.
Long-term buy and hold investors may prefer a broker not as geared toward frequent trading.
As an individual investor, you’ll want to open an account with a commission-free online broker. That way, you’ll invest most of your money instead of waste it on fees.
I’m a big fan of the online brokerage M1 Finance. M1 Finance is a reliable and robust, no-fee online broker for beginner to advanced investors.
As your investing skills and portfolio mature, M1 is one of the best platforms to scale.
Investing in stocks is 100% free on the platform. They also offer an integrated checking account and low borrowing rates. Read my complete M1 Finance review here.
The platform is more intuitive than old school brokers because it’s built on a modern technology platform. You create portfolio “pies” that contains all the stocks and ETFs you want to own and in what percentages. Add Databricks stock to your portfolio pie once it begins trading.
M1 Finance does not offer IPO access. But it’s my favorite for long-term investing, which is my preferred strategy for disruptive IPO companies.
* Disclosure: The web page contains affiliate links from our partners. If a reader opens an account or buys a service from a link in this article, we may be compensated at no additional cost to the reader. Opening an account with a broker that provides access to IPOs does not guarantee the customer allocations of specific IPOs. The author is long TSLA, ABNB.