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Square rallies with 24 percent pop in IPO

Debut on NYSE jumps from $9 to $11.20, with a high for the day reaching $14.78

Technology trends and news by Ronny Kerr
November 19, 2015
Short URL: http://vator.tv/n/4192

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Mobile payments company Square debuted on the New York Stock Exchange this morning (ticker symbol SQ), trading at $11.20 per share, a 24 percent pop above the $9 price set by the company yesterday.

The opening price was just $.20 higher than the minimum price originally proposed by the company a few weeks ago. Because of the large pop at its opening, the company could have raised $60 million more with a higher starting price.

At the original $9 price, Square raised $243 million at around a $2.9 billion valuation. The share price has so far risen as high as $14.78 so far, which would give a $4.8 billion valuation at that high end.

That’s still a significant drop from the $6 billion valuation given to Square when it last raised funding on the private market.

Dorsey's other publicly traded company, Twitter (NYSE:TWTR), is trading today at just above $26, which is on par with the company’s original IPO price. On day one, Twitter shares had popped 73 percent to $44.10, but the past two years have been a rocky ride as the social networking service fails again and again to meet investor expectations around revenue growth.

Some see Dorsey’s return as Twitter’s permanent CEO as a positive move for the company. So far, the most significant action he has taken is to lay off eight percent of the workforce, or over 300 employees.

As for Square, Dorsey must still prove that the company can translate its high growth into high profits, which so far has not been the case. For the first six months of 2015, revenues were $560.6 million, net loss was $77.6 million, and gross profit was $164 million.

Square’s IPO is especially interesting for tech analysts and industry leaders as it will serve as a new data point in the overall health of technology companies on the public markets.

It’s no mystery that the IPO market is in a poor state right now. In the third quarter of this year, for the first time since 2011, "average IPO returns were negative (-4%) and more IPOs ended the quarter below their offer price than above it," according to Renaissance Capital. Though Square has had a good day so far, it will be a few months before the dust settles and we can accurately determine whether much has changed for tech companies going IPO.

As an immediate point of comparison, IAC-owned Match Group also went public today, popping from its $12 share price to $13.50. The original price valued the company at around $3 billion. Match Group is the parent company of three dating apps and services: Match.com (an online dating service launched 20 years ago), OKCupid (a cutesy dating site for the social media generation, lauched 11 years ago), and Tinder (a hookup app launched three years ago).


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