The share price has been lowered from the $11 to $13 per share price range initially proposed by Square in its S1, which would have given a $4.2 billion valuation at the high end. San Francisco-based Square, run by Twitter Inc (TWTR) Chief Executive Jack Dorsey is expected to price shares for its IPO late Wednesday.
Advertisement
It’s the moment of truth for Square, as the mobile payments company is set to price its IPO in a highly-anticipated deal that will act as a litmus test for tech unicorns. The disappointing pricing illustrates a tough market for the debut of tech companies, underscoring the chasm between the optimism of private company valuations and a skeptical public market. “And the reality is not that”.
Compounding concerns is Dorsey’s dual role running Twitter Inc., a social media company struggling for a turnaround.
Founded in 2009, the company started as a way for small businesses to accept credit card payments through mobile devices.
The valuations for Square’s and Match Group’s initial public offerings will be revealed soon, but it’s become clear that both are falling victim to the fading of the unicorn craze pertaining to tech IPOs.
The company plans to sell 25.7 million Class A common shares, while a charity created by Dorsey is set to sell about 1.35 million.
Square will begin trading Thursday on the NY Stock Exchange under the symbol “SQ”.
Once valued at $6 million, the IPO price now values the company at a shade below $3 billion.
Many have held up Square as an example of how fleeting – and at times nonsensical – private market valuations can be.
The low price Square negotiated on Wednesday means the company will raise a smaller amount of money in the offering. “These are formidable competitors”.
Advertisement
Last year, Square’s losses jumped to $154 million on $850 million in revenue, from about $105 million on $552 million in revenue during 2013.
