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Square Prices Its IPO at $9, giving it a $2.7B valuation

techcrunch.com

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Re: Square Prices Its IPO at $9, giving it a $2.7B valuation

#11

Post by jdoliner »

TazeTSchnitzel wrote: post #8

> Square Prices Its IPO at 9$ Not a very helpful submission title. Without knowing the number of shares or previous share price, this is meaningless. The market capitalisation would be better. Including the previous projection better still.

It's not really the submitters fault though. In keeping with HN etiquette they posted the title of the article. I'd be criticizing TC here.

Re: Square Prices Its IPO at $9, giving it a $2.7B valuation

#12

Post by pyrrhotech »

gatsby wrote: post #2

Wow, that's priced at ~2.8x 2015 revenue. So low.

the average P/S ratio of the S&P 500 is at a historic high around 1.8 (http://www.multpl.com/s-p-500-price-to-sales) with long term average at 1.4, so this is still double the long term average. Square's gross margins are very thin in comparison to many other "household name" tech companies, so it deserves a much lower P/S. I've also heard growth is really slowing. This multiple doesn't surprise me at all, and I still won't be buying any of the stock.

Re: Square Prices Its IPO at $9, giving it a $2.7B valuation

#14

Post by SeoxyS »

jdoliner wrote: post #10
bpodgursky wrote: post #9

According to crunchbase, they raised money at a $3.25B valuation in 2012. If they are IPOing at $2.66B now, that means a lot of stock options granted in-between are going to be worthless, unless they were granted at some very different price...

In my experience incentive stock options that companies give to employees normally are heavily discounted.

That, plus they've probably been granting RSUs for a while, which do not require being exercised and which cannot be underwater,

Re: Square Prices Its IPO at $9, giving it a $2.7B valuation

#17

Post by CyrusL »

mey wrote: post #4
gatsby wrote: post #2

Wow, that's priced at ~2.8x 2015 revenue. So low.

Not going to go dig for the SEC filing, but transaction revenue is not something look at, as that is basically booking money they are moving on behalf of someone else. I would suggest looking at EBITA, fraud loss, avg transaction fee schedule and transaction number volume.

Square uses "Gross Payment Volume" to describe that, not revenue. GPV is ~$30 billion.

You can search for GPV in the S-1 to see the specifics: https://www.sec.gov/Archives/edgar/data/1512673/000119312515...

Re: Square Prices Its IPO at $9, giving it a $2.7B valuation

#18

Post by gatsby »

bpodgursky wrote: post #9

According to crunchbase, they raised money at a $3.25B valuation in 2012. If they are IPOing at $2.66B now, that means a lot of stock options granted in-between are going to be worthless, unless they were granted at some very different price...

Yes, Square's private per share prices:

Series A: $0.21627

Series B: Series C: $5.79817

Series D: $11.014

Series E: $15.46345

IPO @ $9 is not great for lots of folks, but mostly late-stage employees (assuming D & E investors have a liquidation preference - though I don't know for sure).

Re: Square Prices Its IPO at $9, giving it a $2.7B valuation

#20

Post by jrbedard »

TazeTSchnitzel wrote: post #8

> Square Prices Its IPO at 9$ Not a very helpful submission title. Without knowing the number of shares or previous share price, this is meaningless. The market capitalisation would be better. Including the previous projection better still.

Just added your suggested figures.
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