The company co-founded by Twitter chief executive, Jack Dorsey found itself in the midst of a storm of negative coverage Wednesday evening when it priced shares in the company at $9 (€8.38), far below the previously stated $11- $13 range.
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“Now is the time, because you have a big platform shifts in payments happening in the United States and we wanted to get that message out”, said Square CFO Sarah Friar in an interview with this newspaper.
After Square filed its intentions to go public in October, investors were initially curious about the demand and valuation the payment startup would be able to command.
Mutual fund Fidelity Investments recently lowered the estimated value of its stakes in private tech companies such as Snapchat, Dropbox and Zenefits.
Square Inc., a company known for its payments processing services, is getting valued at about $3 billion publicly, roughly a third less than what it had been fetching privately. And its cut is not surprising, given the returns of other high-profile “unicorns” this year (Box: -4%, Etsy: -46%, Pure Storage: 2%).
With shrinking growth rates and concerns over how much it costs for Square to pick up new customers, the company will have to move quickly to stand up to the investor scrutiny that accompanies a public debut. Even though both firms are very different, they do share a CEO in the person of Jack Dorsey.
Mobile payments startup Square (SQ) began trading on the New York Stock Exchange Thursday under the ticker SQ.
But Friar notes that all of Square’s products go hand-in-hand and the company’s payments data gives it an edge over its competitors.
Square reported mounting losses for the first nine months of the year, compared with the same time in 2014, and slowing revenue growth. (TWTR – Analyst Report) and Square.
In its latest filings Square posted a Q3 loss of $53 million on revenues of $322 million, its eighth successive loss-making quarter. Square is expected to sell 31.05 million shares. He added, however, that the IPO valuation places Square’s multiples higher than more established merchant acquiring peers.
It’s been a rough year for tech companies on Wall Street: Handcrafted goods e-tailer Etsy, for example, has seen its share price fall steadily since its IPO in May.
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In an interview with Bloomberg, Dorsey said, “It’s something that’s been a long road – it’s a milestone [referring to the IPO]”.
