Square, the mobile payments company co-founded and run by Twitter Chief Executive Jack Dorsey, made an exquisite market debut, leading other tech startups to have the courage to go public, says Reuters.
Square’s shares went up 64 percent, with a high of $14.78 in early trading on Thursday, valuing the company at $4.77 billion, according to the same source. But the initial public offering of $9 per share was well below the expected range of $11-$13, rising some questions. One of them is what would mean for startups that are worth at least $1 billion to go public, taking into consideration the low IPO price?
Everybody seems to be an optimist
“The shares will do well given they have been priced far below their range and because there’s real opportunity for new startups,” said James Angel, associate professor of finance at Georgetown University’s McDonough School of Business, quoted by Reuters.
Square’s performance in its debut on the market is even more impressive as competition is bigger in the mobile payments market, with Apple launching its Apple Pay service, Amazon exploring in-store payments, and start-ups such as Stripe ready to rumble. But Square‘s great start wasn’t the only one. The online dating company Match Group Inc, shares rose as much as 13 percent in its debut. With hard times for U.S’ economy and slow global growth, this performances gives hope to startups to go public.
There’s a lot of hidden potential in Square
Square reported a loss of $131.5 million in the first nine months of the year after losing $117 million a year earlier, but revenue rose 49 percent to $892.8 million, says Reuters. “Square’s financials leave much to be desired. But there’s still a lot to like here, and think the success of their debut will say a lot about the current IPO environment,” said Brian Hamilton, chairman of data firm Sageworks, according to the same source.