Square is set to begin trading on the New York Stock Exchange on Thursday, and there is a lot riding on it.
The digital-payments company set the price for its initial public offering at $US9 per share, below the $US11 to $US13 range it had initially proposed.
The price is below the $US15.46-per-share price at which it sold stock in its most recent private funding round.
Square is not the first tech startup to do go public at a lower valuation than its last round of private funding — New Relic, Hortonworks, Box, and a handful of others have recently done the same. But it is certainly the most high-profile company to do so.
If things go well for the company and it has a successful trading debut, it could signal to other “unicorns” — tech companies with valuations of $US1 billion or more — that it’s ok to go public at a lower valuation than they have in the private markets.
“If Square trades stably or continues to increase in value, I think what it will do is it will provide some confidence to other unicorn companies that they can actually tap the public markets even at a price below what they might have last raised in the private market — and the world won’t implode,” Phil Haslett of EquityZen, a marketplace for investors looking to buy shares from startup employees, told Business Insider.
“If Square is a big success, there’s not necessarily going to be a flood — but a big increase in companies tapping the public markets for further financing,” Haslett said.
We’ll be tracking how Square is trading here.
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