Square Is Going Public At A Price Lower Than Planned

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Facing yet more investor skepticism, electronic payments company Square reportedly priced shares for its upcoming public offering at $9—lower than the company’s proposed IPO range of $11 to $13 a share, and far below the $15.46 price Square had set for private investors during its fundraising round last year. That puts Square’s valuation at around $2.9 billion—dramatically lower the company’s earlier, much more optimistic private valuation of $6 billion.

Square’s IPO announcement comes at a time when the market has become increasingly wary of possibly overvalued tech startups, and some critics have clamored for Silicon Valley to be more realistic about how the companies it prizes will hold up under public scrutiny. Recently, mutual funds including Fidelity and Blackrock marked down the value of their stakes in several late-stage startups, including Snapchat and Dropbox. Square, a six-year-old payments company founded by Twitter CEO Jack Dorsey, has been held up as one of the more highly anticipated tech IPOs over the past few months. But this excitement apparently hasn’t extended to investors.

Because a provision in Square’s most recent private round of funding guaranteed later-stage investors a so-called ratchet, Square will issue those investors extra shares to make sure they receive a 20 percent return on their investment—further diluting the value of the company’s shares. Square will begin trading under the ticker symbol “SQ” on the New York Stock Exchange tomorrow morning.

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