Rare IPO turnaround: Square Shares Trading Debut
Published: November 21, 2015
Rare IPO turnaround: Square Shares Trading Debut, If you know the story of Square, what may come to mind is a payments company that caters to sleepy Brooklyn cafes and distributes a square-shaped credit card reader for mom-and-pop outfits. Perhaps, you may think, it is a start-up for hipsters.
That company now has to prove it is much, much more.
Square began trading as a public company on the New York Stock Exchange on Thursday, at one point surging more than 64 percent above its initial public offering price of $9. It ended the day up 45 percent, closing at $13.07.
The first-day pop followed a turbulent I.P.O. process for the six-year-old company, one that was marred by questions over pricing and valuation and that arrived in the face of a precarious public market for technology offerings. On Wednesday, when Square had priced its shares at $9, that was lower than the $11 to $13 range it had set, putting its valuation at $2.9 billion, well below the $6 billion price tag that private investors had valued the company at last year. As recently as Wednesday, advisers laid out options for Square, including pulling the deal, three people briefed on the discussions said, who spoke on the condition of anonymity, but for Square, that was not an option.
“We have a great beginning,” said Jack Dorsey, Square’s chief, striking an upbeat note in an interview on Thursday, which was his 39th birthday. “I don’t see negativity as necessarily something that detracts from our work.”
The I.P.O. ordeal illustrates the difficulties – some might say guesswork – of accurately valuing companies, both when they are private and when they go public. And Square, which closed its first day trading with a market capitalization of $4.4 billion, now faces the challenge of moving on from the fund-raising event, solidifying its business and building itself up.
“I want to get back to a steady state and back to business,” Mr. Dorsey said. He added that Square’s strategy now was “to continue to save people trips to the bank. We’re not going out there to say we’re getting rid of the banks or card networks. We’ve just put a much cleaner face on that infrastructure.”
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