Square IPO: Payments Company Stock Jumps In Market Debut

“By pricing at $9 knowing demand would be at $13, Square was willing to forgo $100 million-plus of cash they sorely need in order to create the impression of a strong IPO”, Gil Luria, an analyst at Wedbush Securities Inc., said.

The slight rise follows a humiliating stepdown in pricing and expectations for the fast-growing – but loss making – company founded and led by Twitter chief executive Jack Dorsey, who turned 39 today.

Other technology startups, including Box Inc., have priced IPOs this year below where the companies had been valued by private investors.

If things go well for the company and it has a successful trading debut, it could signal to other “unicorns” – tech companies with valuations of $1 billion or more – that they too can go public at a lower valuation than they had in the private markets. In fact, 35 out of 144 companies lowered their IPO price as of Wednesday.

One-third of US-based tech companies that went public this year priced their shares below their private value, according to data from market intelligence company Ipreo and data provider Pitchbook and analysed by Reuters.

Dorsey, a Twitter co-founder, was named CEO of the social media giant in October and now runs both companies. “This is what can accelerate us as a business”.

The shares are set to begin trading on Thursday on the New York Stock Exchange under the symbol “SQ.” and the offering is expected to close on November 24.

Square agreed to give the investors more shares if its IPO price did not reach a certain level.

“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. Since its debut in 2009, the company’s Square Readers have flooded small businesses as an easy means of processing credit card payments.

For the nine months ended September 20, Square made $892.8 million in revenue, a 49 percent increase from the same period in 2014, but slower revenue growth compared with prior years.

It posted $131.5 million in losses, up from $117 million the prior year.

Even at a $2.9 billion valuation, Square would be trading at nearly 7 times Luria’s sales forecasts.

More unicorns will be going public no matter what – but it will be a little easier if Square and Tinder are thriving.