By Owen Davis -
Within minutes of its Wall Street debut, shares of Square (N:SQ) were trading at above $13 per share, a 40 percent pop over its initial offering price of $9.
The payments company launched by Twitter (N:TWTR) co-founder Jack Dorsey hit some potholes in its approach to an initial public offering this week. The company priced at an underwhelming $9 per share late Wednesday, missing an anticipated price range for a valuation of $2.9 billion -- far short of the $6 billion valuation that private investors sought in previous funding rounds.
The less-than-stellar launch comes as public investors have grown skeptical of the sticker price on Silicon Valley's 140-plus "unicorns," or private companies valued at over $1 billion, even as private investors continue pouring millions of dollars into promising tech ventures.
Increasingly, those private investors are inking deals that ensure profits, even if the company whiffs its IPO. Such provisions, called "ratchets," meant Square had to pay out some $93 million in extra shares to late-stage investors, including JPMorgan Chase & Co (N:JPM)., that had expected Square to open at more than double the price that it did.
According to S&P Capital Insights, the average tech IPO in the second half of 2015 experienced a one-day pop of more than 13 percent.
Coincidentally, another company went public valued at $2.9 billion Thursday. Match Group (MTCH), the online dating empire responsible for Tinder and OKCupid, was priced at $12 per share before its public open.