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Square sets IPO price range, would be valued below last private round

November 6, 2015, 11:36 AM UTC

Payments company Square this morning filed paperwork with the Securities and Exchange Commission that suggests that company plans to sell 27 million shares in its upcoming IPO at between $11 and $13 per share. At the high end of that range, Square would be valued at approximately $4.19 billion — which is much lower than the company’s most recent valuation in the private market.

The San Francisco-based company would have a dual-class stock structure, and the float would represent just over 8% of its total outstanding shares. On a fully-diluted bases — meaning that all restricted stock units and other such instruments are exercised and converted — the company would have a valuation of around $6.2 billion at the high end of its proposed IPO range.

Square, founded and led by Twitter (TWTR) CEO Jack Dorsey, filed its public documents for an IPO in October, after filing confidentially earlier this summer. It will list on the New York Stock Exchange under ticker symbol “SQ,” with Goldman Sachs (GS) serving as lead underwriter.

In its original S-1 filing, Square reported a $77.6 million net loss on around $560.5 million of what it calls “net revenue” for the first six months of 2015, compared to a $79 million net loss on around $372 million in revenue for the same period in 2014. But in a more recent filing disclosing third quarter financials, Square posted a net loss of $53.9 million on $332.2 million in revenue, representing slower revenue growth and faster loss growth than in the year-earlier period.

With this filing, we can assume that the roadshow will start on Monday morning, with the public listing to take place the week prior to Thanksgiving.

Square most recently raised $180 million in private funding at $15.46 per share, in a multi-stage Series E round that spanned from September 2014 through just last month. Holders of Series E stock will receive extra shares if the IPO prices below where they purchased, via an anti-dilution provision known as a ratchet (additional shares would represent 1.6% of total outstanding shares, were Square to price in the middle of its proposed range).

It’s also worth noting that the lower end of Square’s anticipated IPO range also is below the $11.01 per share price of its Series D round, which was raised all the way back in September 2012. None of Square’s private investors are expected to sell stock in the IPO.

The company also agreed back in August to facilitate the sale to a third party of around 2.27 million Series D shares currently held by Starbucks (SBUX) at a minimum of $16.30 per share by the end of next October, as part of its termination of a money-losing partnership with the coffee shop giant. However, if Square completes its IPO, that obligation would be erased at the conclusion of its lock-up period.