Payments company Square has set its IPO offering to price at $11 to $13 per share. This will raise up to $403.7 million, and value the company at approximately $4.19 billion. This valuation would be actually be well below its last round of private funding, when its Series E round valued its shares at $15.50, with a $6 billion valuation.
But since this is just the initial pricing, the strategy with such IPOs is to set the pricing low to entice investors. Now Square will go on an IPO road show to sell the IPO to investors, so the pricing could well go up, although the valuation is unlikely to rise above $6 billion.
CEO Jack Dorsey is also CEO of Twitter, which may be one explanation for the discount on the stock: there remains uncertainty about how he will divide his time.
The IPO comes at a time when some say private valuations of tech companies have been too frothy. In its first S-1 filing, Square revealed slower revenue growth and faster loss growth than in the year-earlier period.
The roadshow will probably now start on Monday, with the IPO in the week prior to Thanksgiving.
It will list on the New York Stock Exchange under ticker symbol “SQ,” with Goldman Sachs GS 2.24% serving as lead underwriter.