Expectations for Square’s IPO were all over the place. The company itself had planned to issue the shares in a range of $11 to $13—and then priced the stock late yesterday (Nov. 18) at $9.
That wasn’t a turnoff for investors, though. The shares opened at $11.20 on the New York Stock Exchange under the ticker SQ. Square went all the way up to $14.78, and have now settled at around $13 in midday trading, a 45% bump from the IPO price.
The public offering highlights Wall Street’s continued interest in tech unicorns, even ones with soaring valuations. But there’s a concern that public investors aren’t fully on board with the rising valuations of tech startups, a phenomenon fueled by venture capitalists in the industry. In the private markets, Square was last valued at $6 billion, but the IPO terms implied a valuation of less than half that amount.
The $9 share price settled on for the IPO was lower than share prices during Square’s Series D ($11.01) and Series E ($15.46) fundraising rounds. Series E investors were issued more shares to make up the difference, thanks to a stipulation in the deal protecting their returns from just such an event.
Yet, even though Square’s valuation fell, Wall Street and retail investors bought into the IPO, suggesting there’s still substantial interest in tech companies, but at a realistic and reasonable value.