Square goes public, market cap slashed
Mobile payments firm begins trading at $9 per share, well below initial guidance
Mobile payments firm Square, which shares its CEO with social network Twitter, went public yesterday with shares priced at $9, according to Reuters.
The low share price, while expected, was down from initial guidance issued last month, which predicted a share price of $11 to $13. In the end, according to Wall Street, Square is valued at $2.9bn, well below the $6bn that the company was valued at during its last round of private funding.
This also meant that the company raised around $80m less from its IPO than it was hoping for - the total amount raised was $243.5m, Reuters reported.
The flotation is one of the first major indications that Wall Street is not aligned with Silicon Valley's willingness to invest in loss-making ‘unicorns'. A unicorn is commonly described as a start-up with a valuation of over $1bn. And while Square fits into that category, its speciality in the mobile payments space has not so far impressed Wall Street, which is dubious about the space entirely.
For the first nine months of 2015, the company posted $131.5m in losses. However, it has experienced 49% revenue growth compared to last year.
Adding to the problem is CEO Jack Dorsey's dual role as Twitter CEO. Analysts have criticised Square for not communicating how Dorsey will manage the two responsibilities. Square investors are particularly worried about the fact that Dorsey was a co-founder of the social network, and fear that he may prioritise that business over Square for personal reasons.
Square has only said that Dorsey will provide his "full business efforts and time to the company."