Jack Dorsey made $300m on Square

Square Inc priced shares at $9 for its initial public offering, about 25 percent less than it had hoped, as it struggled to win over investors skeptical about its business and valuation before trading begins on Thursday. In frenzied trading of over 47 million shares, the shares finally ended the day at $1’3.07, still a 45% gain.

Square CEO Jack Dorsey gets a birthday kiss from his mother, Marcia Dorsey, before his company’s IPO at the NY Stock Exchange, Thursday, November 19, 2015. “It’s all about getting the business and accelerating the business and that’s what we cam here to do today and we did it”. Before paying its investment bankers and other fees, Square raised $231 million in the IPO, instead of the $282 million to $346 million that the San Francisco company had been seeking.

Square’s IPO raised $243 million after the company’s shares were priced at $9 each. In 2012, the company’s net revenue was $203 million. These revenue streams, however, are still nascent areas of potential growth for the company; payments processing still makes up roughly 95% of Square’s overall revenues, according to Square’s IPO documents. It now offers services ranging from loans to invoice software.

But a relatively small and yet influential group has been in a positive tiss about this company and its going public for weeks, if not months.

Square, which started in 2009 by providing financial transaction softwae for smartphones or tablets along with free “dongles” that read magnetic strips on payment cards, was among prominent unicorns in startup-rich Silicon Valley.

Tom Donino, co-head of trading at FNY Capital Management, said it is unusual to see a stock trade up so much after pricing below the expected range, as Square’s did. It was somewhat below a price range of $11 and $13 which the company had said it expected in a regulatory filing in early November. Last month, Dorsey was appointed chief executive of Twitter, the social media company he co-founded, with a few critics questioning whether he would be able to manage two public companies. His stake in Square is worth $930 million and his Twitter stake will be worth about $400 million after he turns over 6.8 million shares of his stock in that company to its employees.

The mega-values assigned to unicorns have even led to talk that companies don’t even need to go public – that they can somehow stay private indefinitely, continually raising venture capital to fund their activities and allowing investors in only through the burgeoning private stock markets. Its biggest corporate partnership with Starbucks turned out to be a bust, resulting in a net loss of $28 million previous year and continues to be unprofitable.

The company’s still solidly in the red, but it narrowed its operating losses year over year, from $79.9 million in the first half of 2014 to $74.4 million in the first half of this year.

Firms that invested in later private rounds have benefited from the IPO in other ways.

“They are competing with Visa and American Express and PayPal, and more and more with Apple and Google”, said James Gellert, CEO of Rapid Ratings, which rates the financial health of companies.

Meanwhile, LoanDepot, a fast-growing online USA mortgage lender, last week delayed its IPO because of market conditions.