It appears a mobile payments company is getting its investment life off on the wrong foot.
Square Inc (NYSE: SQ) priced shares at $9.00 U.S. for Thursday’s initial public offering, or about 25% less than projected, seeking to convince wary investors about its valuations.
The mobile payments company and a selling stockholder offered 27 million shares, raising $243 million U.S. in its Wall Street debut, about $80 million U.S. less than expected.
The San Francisco-based company earlier this month set a price range of $11.00 to $13.00 per share, well below the $15.46 U.S. investors paid in Square's most recent private financing round last year.
The weaker price puts Square's market capitalization at $2.9 billion U.S., a far cry from the $6 billion valuation it had earned from private investors.
What’s more, Square CEO Jack Dorsey's dual role running Twitter Inc, (NASDAQ: TWTR) is causing investor concern.
Investors have criticized Dorsey and Square for not better communicating how he plans to split his time between the two companies.
Only on Monday did Square touch on Dorsey's dual roles in an updated IPO filing that states Dorsey will give his "full business efforts and time to the company, other than with respect to (his) work with Twitter Inc."
Founded in 2009, the company started as a way for small businesses to accept credit card payments through mobile devices. It has evolved into a suite of small-business services, relying on partnerships with companies such as Apple (NASDAQ: AAPL) and Visa (NYSE: V).
Square began trading on Thursday on the New York Stock Exchange under the symbol "SQ", and, by mid-morning, had topped $11.20 U.S. per share, on volume of 4.9 million shares.
The offering is expected to close on November 24, subject to customary closing conditions. Square has granted the underwriters a 30-day option to purchase up to an additional 4,050,000 shares of Class A common stock from the company. Giving effect to the offering, there are 355 million diluted shares outstanding using the treasury stock method.
For the nine months ended Sept. 20, Square's revenue totaled $892.8 million U.S., or a 49% increase from the same period in 2014, but slower revenue growth compared with prior years.
It posted $131.5 million in losses, however, up from $117 million U.S. the prior year.
