Square raised $243 million through its IPO on Thursday. Listing on the NYSE under the symbol SQ, shares were priced at $9, noticeably below the expected range of $11-$13. Although the initial pricing was discouraging, shares rallied on the secondary market, opening at $11.20 and closing the day at $13.07 (up 45%).
This strong first-day performance may be just the thing that motivates large, private tech companies—many of which have stayed private by raising massive VC rounds—to go public. Initially, Square’s offering had seemed like an example of why not to go public; at the midpoint of its estimated price range, the company would have been valued at $3.87 billion, a roughly $2.13 billion haircut off the valuation of its last private round. That feeling was compounded when news broke of the even-lower $9 price point. It appears that those worries may have been somewhat misguided. Although the company is still valued below its latest private valuation—it closed the day with a market cap of $4.22 billion—the first-day rally could serve as a sign that the public markets can be a hospitable place for large tech companies. Eyes now turn to other unicorns, such as Dropbox and Airbnb, to see if they will take the public market plunge or continue watching and raising from the private sector.