Are Tech IPO in rough shape?
The mobile payments company begins trading on the New York Stock Exchange with shares priced at an underwhelming $9. Square’s performance will be used to gauge the IPO value of other “unicorn” tech startups.
Square is going public tomorrow (Nov. 19) at a stock price short of Wall Street’s expectations, and its own.
Square has its own challenges, but its IPO drama also highlights the growing disconnect between public and private market investors. With startup valuations soaring higher than ever, there’s concern that Square won’t be Wall Street’s only victim. Mutual funds like Fidelity have beenslashing the value of other major startups, like Snapchat, Zenefits, and Draftkings.
Meanwhile, Wall Street hasn’t been too enamored with Square’s financials. The payments firm has been growing at a nice pace, but at the sake of profits. In its most recent S-1 filing, Square reported a third-quarter loss of $53 million on revenue of $332 million. Another potential reason for the drop in Square valuation might be concern over CEO Jack Dorsey’s other job, as the CEO of Twitter, another company that’s been struggling in the public markets.