Square, the mobile payments startup known for its iconic credit card readers for phones and tablets, will not hold an initial public offering this year.
In fact, Fox Business’ Katie Roof reports that the company’s IPO has been postponed “indefinitely.”
In November, the company began talks with bankers from Goldman Sachs and Morgan Stanley about an IPO in 2014. A month later, the company met with executives from NASDAQ.
Business Insider’s Nicholas Carlson noted back in December that Square was attempting to raise a round of funding in order to purchase back company stock from employees and speculated that it might mean that the company’s IPO was actually being pushed back.
After all, why raise money to buy stock from insiders if they could sell it in a few months on the public markets?
One possible answer is that the company didn’t yet have the financials to support its $US5 billion private valuation.
Today’s report implies that was the case. One of Roof’s sources states that the company’s “private-market valuation could not be substantiated by their revenues as a public company.” Apparently the company is having trouble with its “revenue run rate,” a key metric when looking at startups considering an exit.
That didn’t stop the company from releasing 1 million secondary share in recent weeks, giving many employees the chance to sell their stakes in the company — $200 million worth of which were purchased just this week by Kingdom Holding, the investment fund ran by Saudi Arabia’s Prince Alwaleed.
While it may not be heading for an IPO anytime soon, Square’s financials don’t seem to be holding back its actual business operations. The company recently announced that it acquired BookFresh, a startup that makes it easy to implement self-service appointment booking, and has began beta testing Square Pickup, a new service for ordering food from restaurants ahead of time.
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