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Dead Unicorn Walking: Square IPOs At $9, 42% Below Latest Private Financing Valuation
If having to slash valuations by 30% from the latest private financing round was not bad enough, Square's IPO just priced notably below the expected (already lowered) range of $11-13 (and even further below the $15.46 at which it raised private money last year):
- *SQUARE SAID TO PRICE 27M IPO SHARES AT $9 EACH, REUTERS REPORTS
So from a private valuation around $6 billion to this, and along with Fidelity marking down its SnapChat valuation, it appears that without another massacre in a major city, risk appetite for these paper-behemoths may have gone the way of the mythical unicorn itself.
Square most recently raised $180 million in private funding at $15.46 per share, in a multi-stage Series E round stretching from September 2014 through just last month.
Square’s IPO comes at a time when it appears the company’s losses are growing and revenue growth is slowing. In its original S-1 filing with the SEC, Square reported a $77.6 million loss for the first six months of this year compared to a $79 million loss during the same period in 2014. Meanwhile, revenues rose to $560.5 million from $372 million during the same six months.
In a more recent third quarter filing, Square posted a loss of $53.9 million on $332.2 million in revenue, indicating slower revenue growth and widening losses than before.
As The Wall Street Journal reports,
Skeptical investors forced Square Inc. to sell shares in its initial public offering for less than the mobile payments startup had hoped, dealing another setback to the battered market for new technology-company stock.
The six-year-old company, founded and run by Twitter Inc. Chief Executive Jack Dorsey, priced its shares at $9 late Wednesday. That is beneath the projected offering range of $11 to $13 and even farther below the $15.46 at which Square raised money last year from private investors.
...
“This deal is representative of companies that are falling out of favor with investors,” said Jeremy Abelson, portfolio manager at Irving Investors. “These are companies that are spending a lot to grow their top line but still have a tough path to profitability.”
* * *
A bigger question, as we noted previously, is whether it will be a controlled demolition as unicorns everywhere are demoted to what we first dubbed "zerocorn" status in the coming days. To be sure, the VCs are desperate for a controlled demolition, and hoping the broader market ignores the euphoria that took place in Silicon Valley over the past 3 years, is now over, and that giddy investors overshot by at least 25-35% to the upside in the past several private funding rounds as everyone was rushing to pass the valuation hot potate to ever greater, and richer, fools.
It remains to be seen how successful they will be, and just what the source of capital for hundreds of "$1+ billion"-valued, cash burning companies will be in lieu of generous VCs, and just how viable the second tech bubble will be if these hundreds of companies suddenly are forced to generate cash flow to fund themselves.
One thing we know: there sure are many of them, as this infographic from the WSJ proves:
* * *
Which raises one interesting question...
When is $TWTR buying Square? @Jack
— 3:30 Ramp Capital™ (@RampCapitalLLC) November 19, 2015
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Exactly. I said the same below, but not so succinctly. :)
As a business owner, I've gotten several emails offering me to get in on this great deal!LOL
Here's the prospectus if anyone's interested in looking at it;
https://l3-documents.appspot.com/brands/SQ/prospectus.pdf
enjoying seeing the ultra unicorn rich become less rich...
from APRIL:
Silicon Valley mulls Billion Dollar value startup ‘unicorn’ invasionThe kids working at these scam startups know they are worthless.
I know I am in SF and talk to them all the time. Its a scam and
these kid CEO's have no skill in running a company. This bubble
is about to crash.
Go to glassdoor and read their reviews of these junk companies.
Twitter employees are just putting in their time until they find something else.
Jack 'motivates" people to that kind of greatness.
These VCs will be happy to get a return of some capital compared to what will come next.
They should go into bombing and killing, after recent surge in stawks on massacres of French and Russians.. would make a 'killing' on the IPO that way!
unicorns... doesn anybody remember that polish nazi gold train? silent he?
just wanted to let my buddies here at the Hedge, know about an IPO coming around soon,
this is set to skyrocket,
just need to get the right VC funding lined up,
Allen's Snack Bar
is the latest in a series of small cap emerging markets IPO's (also destroyed markets) just wating in wings.
seems the whole middle east knows about this so it's going to move fast.....
;)
VC's funding brain-dead companies is the reason why the Silicon Valley is such a mess these days.
just move already
Math hurts.
27M IPO SHARES AT $9 EACH
That translates into a valuation of $243 million. The company will lose that much over the next year simply by operating its business.
Still too high.
Ka-Boom. It's OVER.
This can't happen fast enough nor to a more annoying bunch of twats!
So the company is functionally bankrupt, losing money like mad, but still gets to IPO and make Dorsey a few hundred million dollars in a few seconds.
Ain't crime grand.
The past week has been an orgy if Square commercials on TV. The tribe doesn't advertise product, they advertise stock. Stock the sheep are supposed to buy.
Square needs to go to zero.
From Squares own list of Prohibited Goods and Services with Square Register:
"Sales of (i) firearms, firearm parts or hardware, and ammunition; or (ii) weapons and other devices designed to cause physical injury"
The first time I saw that I knew you were chumps amd along with millions upon millions of other Second Amendment supporters declined to do business with merchants using Square and made sure your asshat policy was well known. Of course you live in the fantasy bubble that is San Francisco but know that "fly over country" doesn't want what you're selling.
A larger number of dispruters are being disrupted!
Geez, like it is so hard to build a money losing company!
A conversation with a VC a while back for a senior officer in one of their companies.
He said "You have never ramped up a company quickly."
My response, "No I ramp them up profitabiy."
Now I did take a company from $50 milliion valuation to $1.8 billion in 18 months and that was before this insantity.
I never heard from the VC again.
So they Rounded (down) the Square ?
Unicorns still financin' and piratin' moneys.
it isn't worth $9 either
Here's an overview I did a couple of days ago about all recent IPOs and what flops they've been - https://www.youtube.com/watch?v=a77uvj2xQtc
Instead of Utopian Unicorn Steak, the IPO turned into a re-heated can of Elk Asshole Casserole.
Dear Pud,
Bring back Fuckedcompany.com.
http://www.businessnewsdaily.com/8064-best-mobile-credit-card-processor....