The “unicorns” are still alive! Just. The share sale of mobile payment company Square got off to a good start on Thursday – but only after the Silicon Valley startup was forced to slash the price of its offer.
Square, one of the Silicon Valley “unicorn” startups – companies valued at billions of dollars despite an absence of profits – began trading on Thursday morning on the New York stock exchange.
The sale has been seen as a key test for unicorns including Airbnb, Snapchat and Uber, which have raised billions in private financing that they will one day need to repay via share sales.
Square sold at an opening price well below its own projected range – $9 a share, rather than the $11-$13 the company had hoped for. But by 10.30am the company’s shares had jumped to over $12 and ended the day at over $13.
Founder and CEO Jack Dorsey celebrated his birthday on the NYSE with his mother, Marcia Dorsey, who rang the bell with her son and Cheri Mims, a flower-seller who uses Square in her business.
"I'm at both co's every day. There's a @bluebottleroast in between. And they take ApplePay" - @jack on @CNBC pic.twitter.com/GKHVwWsp5t
— Carl Quintanilla (@carlquintanilla) November 19, 2015
To christen the IPO, Square-using businesses gathered on a stretch of Broad Street between Wall Street and Exchange Place, with band Junior Prom providing music. Dorsey, also the co-founder and CEO of Twitter, rang the opening bell at 9.30am, broadcasting his trip to the stock exchange on Twitter’s live video service, Periscope.
LIVE on #Periscope: On the floor $SQ https://t.co/o3ZWs6lEpu
— Jack (@jack) November 19, 2015
Last year Square was valued at over $6bn and its $9 a share offer valued the company at less than half that. The first-day share rise saved face for Dorsey, who has come under intense pressure from investors who are skeptical that he can run both companies, especially as Twitter struggles to find new users.
Venture capitalist Fred Wilson, on Union Square Ventures, has been bearish about the market in so-called unicorn startups. But on Thursday morning, Wilson came out swinging in defense of Square’s IPO price cut, saying: “Jack Dorsey did the right thing at Square.”
“Sometimes you just need to get the deal done,” he wrote. “When you are burning through cash and need to finance your company, the terms might suck, but the cash doesn’t. So you do the deal and live to fight another day.”
