FinTech

Square Launches Successful IPO

On November 19, the FinTech payments company Square went public, hitting the New York Stock Exchange under the ticker symbol ‘SQ.’ Although the stock’s opening price of $9 was below the company’s initially announced target, it closed the day at $13.07 — up 45%. According to The New York Times’ Dealbook that gives the company a valuation of $4.4 billion.

In an interview with CNBC, Square’s CEO and co-founder, Jack Dorsey (who was actually celebrating his 39th birthday on IPO day) spoke on the company’s philosophies and goals. He mentioned an upcoming device that will enable small businesses to accept Apple Pay and EMV payments and how they would continue to innovate as businesses developed new payment needs. Dorsey also agreed with the analysis that his company lowered their initial pricing in order to get the deal done and, as he put it, “get back to work.”

The interview reinforces Dorsey’s commitment to small business owners who are looking for a fast, easy, and affordable way to accept different forms of payments. Additionally the company has now grown to offer tools for entrepreneurs such as inventory software and point of sale terminals. Square Capital — the company’s initiative that advances business owners money on their payments — has also been popular, reportedly reaching $300 million in loans.

Despite the seemingly positive start for Square, many are now asking if some other tech companies may be overvalued. FinTech companies can be especially hard for investors to value, with some emphasizing the software side Square, while others focus more on the payments. Some also question how much a “disruptor” can really grow in the long run.

While those questions may still worry or confuse investors, Dealbook correctly points out that what sets Square apart is their loyal customers. Case in point, Square’s first merchant is actually a florist named Cheri Mims who sells flowers near Dorsey’s apartment. To celebrate the IPO Dorsey’s mother purchased a bouquet from Mims using the company’s signature square-shaped reader.

Overall Square’s public offering should be viewed as a win not only for the company itself but for the FinTech sector. Like with Lending Club and OnDeck before them, Square’s launch helps set a framework for evaluation for future companies that are not easily defined by Wall Street. Hopefully this successful launch will signal a bright future for other financial technology companies.

Other Articles by Jonathan Dyer