Square is about to set its IPO price, and it will reportedly be even lower than expected
CNBC's Kayla Tausche says sources familiar with the situation suggest Square's IPO could be priced even lower than $11. The company will begin trading on NYSE Thursday morning.
"It appears the large shareholders want a steeper discount on the stock for assurances that it performs well and advisors have been recommending a lower price to the company than expected," Tausche said. "Investors, as we know, have become extremely choosey when it comes to buying new stock, especially for companies that are not yet profitable and in this particular case, whose CEO Jack Dorsey is currently shared with another company in Twitter. Of course, Square could choose to push back on the advice to price below the range. We have seen companies do that in the past, whether it's for optics or to get more proceeds going forward."
Earlier this month, Square set a price range of $11 to $13, or about a $4.2 billion valuation, which was a couple billion dollars lower than the valuation investors gave Square during its most recent private financing. During that round, Square raised $150 million at $15.50 per share. The company has raised over $590 million since its launch in 2009.
A lowered price range would be a disappointment for the tech sector in general. Square has been one of the hottest startups in recent memory, and it was one of the most anticipated tech IPOs of the year.
It'd also be a sign that the tech IPO market in general could be in for a long-term downturn, as there hasn't been a lot of successful tech IPOs this year.