However, Skeptical investors forced Square to sell shares less than it had hoped, making market worsen for new technology company stock. One major question for investors is whether Dorsey, who last month retook the reins at struggling Twitter, can effectively lead both companies.
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But Square is trading strongly, and if things continue to go well, it could signal to other unicorns – tech companies with valuations of at least $1 billion – that they too can go public at a lower valuation than they had in the private markets. Other listings this year, such as that of cloud computing company Box, have been priced below private valuations.
For employee shareholders and many investors, even at a $2.9 billion valuation, their holdings are seeing a considerable return.
Company shares jumped 50% to trade at $13.46 during morning trading, which placed the company’s value at $4.3 billion.
The company’s initial public offering raised $243m at the $9 per share price on Wednesday.
The IPO “ratchets” could become problematic in coming years if those companies can’t price their shares sufficiently high in public markets.
A $9 share price values the San Francisco mobile payments company at $2.9 billion. In 2014, according to its filing, Square processed 446 million card payments from approximately 144 million payment cards.
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.
But it is certainly the most high-profile company to do so.
Square started in 2009 and offers free software app and a small card reader you can plug into your phone or tablet. The concerns that Square investors have is not much different from the concerns that Twitter investors have – the lower IPO price from Square only adds to the concern for Twitter investors.
It happened. Square has filed for its long-awaited IPO, and in doing so gave a small glimpse at the company’s path forward.
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Square, which has been investing heavily, reported a loss of US$131.5 million in the first nine months of the year after losing US$117 million a year earlier, but revenue rose 49 per cent to US$892.8 million.
