Square has set its initial public offering at $9 per share, effectively raising $279 million ahead of its debut on the New York Stock Exchange. The company had hoped to raise between $350 million and $400 million.
The company officially filed for its public offering last month with a guided pricing of between $11 and $13 per share, which would have brought its public valuation to $4.2 billion.
Square is on pace to eclipse a billion dollars in revenue by the end of 2015, though it will still not be profitable. The company has racked up net losses of $131 million in the first nine months of this year. Its public filing also revealed relatively low transaction volume, which is concerning, as it is Square’s main source of income. The company earned revenue of $751 million on $23.78 billion in transaction volume last year. By comparison, PayPal and First Data have significantly higher payment volumes in the hundreds of billions.
The press has not been kind to Square since it broadcast its desire to go public, and investors and other onlookers have shown concern over the disparity between Square’s valuation as a private company and its public valuation.
Undoubtedly, Square still has a lot to do to prove its worth to investors. In addition to growing its payment volume, it will have to bulk up on paid services like its Appointments and Payroll products, which are growing. In the last year, software has gone from 1 percent of Square’s revenue to 4.5 percent.
It’s hard to say how Square will fare as a public entity. However, this initial low pricing for its stock may be a blessing in disguise. Etsy enjoyed a nice pop in stock price when it began trading on the NASDAQ earlier this year. However, since then, the stock has dwindled to below ten dollars a share. By taking a lower valuation, Square has the opportunity to keep its stock price from falling too quickly while it adapts to life as a publicly traded company.