Nov. 06--Could tech's private unicorn companies -- firms that have a valuation of more than $1 billion -- be overvalued?
Judging by the regulatory filing that payments-processing start-up Square filed Friday, the answer could be yes.
Detailing its IPO plans, the company, which was founded and continues to be led by Twitter Chief Executive Jack Dorsey, said it would sell 27 million shares at $11 to $13 a piece.
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These numbers would value the company at $4.2 billion at the high end of the price range, some 30% below the $6 billion it was valued by private investors last year.
The share price still could jump when the company goes public, as cloud storage company Box saw in January when it opened at $20.20 after an initial public offering of $14.
But Square's conservative valuation highlights the difficult position tech companies are in: Despite private investor confidence, these firms are largely untested in the public market, which often are skittish and less forgiving. Box's stock price, for example, now sits a year later just below its IPO price, at about $13.
Square will be listed on the New York Stock Exchange under the ticker symbol "SQ," with Goldman Sachs serving as lead underwriter. The company is expected to raise up to $403 million in the IPO.
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