Dream IPO for Square Inc (SQ)

The price set on Wednesday puts Square’s market capitalization at $2.9 billion, a 52 percent drop from the $6 billion valuation it had earned at its last private funding round. The company plans to trade on the New York Stock Exchange under the symbol “SQ”.

Investors are paying close attention to the flotation of more than 120 startup companies, with a valuation of more than $1 billion, otherwise known as “startup unicorns”. Square operates by taking a 2.75% cut on transactions using its mobile dongle and more for purchases entered manually on its mobile app. The company faces competition from other players, notably PayPal, which was spun off this year by eBay. The Square IPO clearly reflects investors’ skepticism of the “enormous valuations that venture capitalists are putting on private technology companies”.

The low price had caused some investors to speculate about the long term financial health of the company.

Mobile payments startup Square and online dating company the Match Group both pushed higher after completing widely-anticipated initial public offerings.

Box debuted at $20.20 in January after being priced at $14 per share during its flotation.

Square Inc. jumped in its first day of trading, after pricing initial public offerings low enough to entice investors rattled by choppy markets, as well as bulls confident in their growth prospects.

For Square, there were also worries about co-founder and CEO Jack Dorsey’s ability to juggle that role and his newly appointed position of Twitter CEO.

Some of Square’s problems stem from Dorsey himself, who founded Square after being ousted as chief executive of Twitter.

Markets could also take a dim view of the Square public offer as already a number of tech companies that had their IPOs recently have been trading below their offer price.

It’s been a rough year for tech companies on Wall Street: Handcrafted goods e-tailer Etsy, for example, has seen its share price fall steadily since its IPO in May. The two companies made a deal where Square would process credit and debit card payments at all U.S. Starbucks stores.

At Twitter’s price of $26.40 per share Thursday afternoon, Dorsey’s stake in the social media company was valued at more than $575 million.

Square, which has been investing heavily, reported a loss of US$131.5 million in the first nine months of the year after losing US$117 million a year earlier, but revenue rose 49 per cent to US$892.8 million.