Shares of mobile-payments startup Square Inc. surged in their first day of trading, a welcome relief for the beaten- down market for initial public offerings. The shares traded as high as $14.78 earlier in the day.
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The less-than-stellar launch comes as public investors have grown skeptical of the sticker price on Silicon Valley’s 140-plus unicorns, or private companies valued at over $1 billion, even as private investors continue pouring millions of dollars into promising tech ventures.
Square sold 27 million shares in the IPO, raising $243 million in the offering.
Starting November 19, there’ll be much to say for the future of Square Inc as the company goes into its fight for investors.
That’s still a significant drop from the $6 billion valuation given to Square when it last raised funding on the private market.
Square helped put the whole business of mobile payments on the map with its charismatic CEO Jack Dorsey (who’s dividing his time between Square and his new-ish role as CEO of Twitter), while products like its smartphone dongle and stand can feel ubiquitous at times. The public listing was managed by Goldman Sachs, Morgan Stanley, and J.P Morgan, who were the joint book runners for Square’s IPO.
The big jump followed a very low IPO pricing for the company of $9 a share, after institutional investors failed to buy in.
Mac Riley, center, son of Square CFO Sarah Friar, rings a ceremonial bell as the Square IPO begins trading on the floor of the NY Stock Exchange, Thursday, November 19, 2015.
As an immediate point of comparison, IAC-owned Match Group also went public today, popping from its $12 share price to $13.50.
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During the first nine months of this year, square recorded a loss of $131.5 million, and a 49% increase in revenue to $892.8 million. Dorsey is also CEO at Twitter, whose stock is now stuck below its IPO price of $26 set two years ago. “If they can’t find a path to profitability quickly, I’d expect their share price to suffer”, Brian Hamilton, chairman of financial information company Sageworks, said in an email. More than 30 million businesses now use Square’s products, which have expanded to a suite of hardware and software products created to help merchants manage everything from their registers to their payroll.
