Square and Match Group trade higher in stock market debuts
Square founder Jack Dorsey glances over to confirm his identity for a purchase on an iPad running the Square Register app at the Fizzary in San Francisco.
Two members of tech’s $1-billion club saw their shares climb after their stock market debuts Thursday amid growing concern about the lofty valuations of Silicon Valley’s hottest start-ups.
Shares of Square Inc. opened trading at $11.20 and climbed steadily by late morning to nearly $14 on the New York Stock Exchange. The San Francisco payments firm had priced its shares at $9 apiece for the initial public offering, well below its $11 to $13 projected range.
Meanwhile, Match Group Inc., which owns online-dating platforms such as Tinder and OkCupid, opened trading at $13.25 on Nasdaq, hovering slightly higher by late morning.
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The company had raised almost $400 million in its initial public offering, pricing the shares at $12 apiece, the low end of its projected range. That gives the Match Group, a division of New York’s IAC/InterActiveCorp, a valuation of about $2.9 billion.
The company had to weather a last-minute controversy when Sean Rad, Tinder’s chief executive, gave an embarrassing interview to the London Evening Standard in which he discussed how many women he’s bedded and confused the definition of sodomy. Match Group said in an SEC filing Wednesday it did not condone the interview.
Square and a current stockholder were offering 27 million shares in its debut, raising $243 million, or about $80 million less than the company had hoped.
Just a year ago, Square sold shares to private investors at $15.46 apiece, valuing the company at $6 billion. At $9 a share, Square is valued at about $2.9 billion.
Investors appear to be concerned about Square’s ability to distinguish itself in an increasingly crowded field of payment services. Competitors include PayPal, American Express, Visa, Google and Apple.
There is also concern about how Jack Dorsey, chief executive of both Square and Twitter, will split time heading both companies.
Square generates 95% of its revenue from retailers, restaurants and other shops that pay the company a fee to process payments.
In a Securities and Exchange Commission filing, Square said losses rose to $154 million last year on $850 million in revenue from about $105 million on $552 million in revenue during 2013.
The initial public offerings come at a time when the multibillion-dollar valuations of early tech stalwarts are being called into question.
Mutual fund Fidelity Investments recently lowered the estimated value of its stakes in private tech companies such as Snapchat, Dropbox and Zenefits.
Other recent tech IPOs such as Box, Alibaba and GoPro have struggled to maintain momentum after their debuts.
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