Shares of Bending Spoons surged 42% on Wednesday after Berkshire Hathaway disclosed an additional $330 million investment in the Italian technology company, lifting the conglomerate's total commitment to $930 million and its ownership stake to roughly 4%.
The purchase was structured as a private placement of 10 million ordinary shares at $33 each. That price is below Tuesday's close of $37.86, meaning Berkshire is buying at a discount even as the stock rallied sharply on the news. According to LSEG data, Berkshire now ranks as Bending Spoons' sixth-largest investor.
Berkshire's backing and Bending Spoons' strategy
Bending Spoons acquires digital businesses and works to improve their operations and profitability. Its portfolio includes AOL, Vimeo, Evernote, Brightcove, Eventbrite, Airtable, Tractive and WeTransfer. In September, the company agreed to acquire Miro in a $1.4 billion deal. Co-founder and head of business acquisitions Francesco Patarnello said the company continues to evaluate merger and acquisition opportunities and maintains a strong pipeline.
The company said the fresh capital will strengthen its financial flexibility and support its acquisition strategy. Berkshire first invested $600 million in Bending Spoons' July IPO before committing the additional $330 million.
Valuation remains a concern
Despite the rally, Bending Spoons trades at a substantial valuation relative to its projected financial performance. Based on the share count implied by the announcement, the company carries a market value of around $40 billion and had approximately $4 billion in debt at the time of its IPO, according to Barron's. The stock trades at nearly 10 times forward sales based on enterprise value, which includes market capitalisation and debt, and around 30 times projected 2027 earnings.
Berkshire's investment could generate a substantial paper gain following Wednesday's rally. Barron's estimated the conglomerate was sitting on a profit of approximately $600 million after the stock's rise. The $33 placement price also means investors buying after the rally are paying considerably more than Berkshire paid for its latest shares.
Berkshire's technology push under Greg Abel
The investment comes as Berkshire has increased its exposure to technology companies under CEO Greg Abel, who took over at the start of the year. The conglomerate has also built a significant position in Alphabet, Google's parent company, which became its third-largest common stock holding. Berkshire's largest stock investments include Apple.
The shift towards technology marks a notable development for a company long associated with Warren Buffett's value-investing philosophy. Berkshire has historically favoured businesses trading at attractive valuations, including Japanese trading companies and homebuilder Lennar. Bending Spoons' valuation contrasts with some of those traditional investments, as its shares trade at nearly 10 times forward sales, while Berkshire's previous investments have often focused on lower earnings multiples or businesses trading below book value. The latest purchase may therefore raise questions about how Berkshire is balancing its traditional investment approach with opportunities in technology.
This article is for informational purposes only and does not constitute financial advice.
