Did Square and Match IPOs hit the right notes?

20 Nov 2015

Both Square and Match debuted on the market with IPOs that should be of interest to pretty much everyone at the moment. But how did they do?

Going for an IPO is a stressful time for any soon-to-no-longer-be start-up. What should I value my company at? When should I do it? What are the optics I have planned? As with everyone else, for Match and Square these issues arose.

We’ll start with Square, the mobile payments company Jack Dorsey,  Twitter’s former, former interim and current CEO, started up a few years ago.

Originally hoping for $13 shares, sentiment soon sent Dorsey’s company a different way, eventually settling on $9 per share to value Square at $2.9bn.

Strong impression

Once out in the wild, though, prices moved up a bit beyond that $13 initial plan, with the margin between the offering and the closing showing just how off kilter everybody seems to be.

“By pricing at $9 knowing demand would be at $13, Square was willing to forego $100 million-plus of cash they sorely need in order to create the impression of a strong IPO,” Gil Luria, an analyst at Wedbush Securities, said to Bloomberg.

Add this to the fact that last year investors put $150m into Square at well over $15 a share – it all means that hopes of a $6bn valuation of the company receded down to around $3bn before going up to $4.2bn.

Most would find that valuation of a start-up that has never made a profit as outstanding but, when it’s revised down from almost 50pc higher, it can leave people a little out of sorts.

Match made in heaven?

Meanwhile, Match, the owner of Tinder, Match.com and OkCupid, has seen profits before, meaning it should offer some interest to would-be investors.

But the company has had a rocky few days in the lead up to IPO, not what a company wants.

Tinder CEO Sean Rad gave a ludicrously embarrassing interview to the London Evening Standard, showing his knowledge of the English language and, amid uses of the word ‘sodomy’ that you really can’t have expected, represented all the things people don’t like about his business.

Match distanced itself from that ramshackle scenario but, just 24 hours before going to IPO, the optics weren’t the best. Despite this, its IPO is going relatively well, with shares raising around 23pc after initial investors spent $12 on them earlier in the week.

This fell in line with its plans earlier in the week when $467m was hoped to be raised, with the company now valued at around $3.5bn.

Matchstick and dollar image via Shutterstock

Gordon Hunt was a journalist with Silicon Republic