All eyes were on payments company Square on Thursday morning, as one of the Silicon Valley’s many so-called unicorns ventured out into the public markets.
Things got off to a rocky start when Square priced its stock at $9 per share, suggesting a $2.9 billion valuation compared to the $6 billion its most recent private investors paid. But the stock popped and climbed almost 45 percent to $13 per share within the opening hours, bringing things about in line with where analysts expected the stock to be priced.
The offering ended up raising a total of $243 million.
Analysts were keeping a close eye on Square’s blockbuster IPO, as it was seen as a test for the broader technology industry. Private company valuations have recently soared to new heights and IPO activity has dipped to its lowest point in years.
Some tech industry luminaries have warned we’re in the middle of another tech bubble, arguing that many of the unicorns — or private companies valued over $1 billion — we see today are proof of inflated valuations. The theory is that many of those companies will stumble when they’re forced to move past the hype and have to become profitable, publicly traded businesses.
Square didn’t seem too concerned, filing one of the tech industry’s few IPOs of 2015.
The company had raised its most recent private funding at a $6 billion valuation, while at the same time experiencing widening net losses year after year. When Square filed to go public, we learned the company had lost $131 million in the first nine months of 2015, up from $117 million it lost during the same time last year. Revenues, meanwhile, have been growing steadily from $203 million in 2012 to $850 million in 2014.
The jury is still out on what to make of Square’s public market debut, but it will certainly be something to keep an eye on over the next few quarters.
