Square IPO: Is now the right time?
In what has turned out to a squishy year for IPOs, payment company Square is taking its own stab at raising some dough through its own stock offering. But the technique being turned to as an answer to building the company up, is actually leading to a whole host of new questions. Marketplace host Adriene Hill spoke with Marketplace tech correspondent Molly Wood to see whether the company’s gamble has a good shot at paying off.
On why Square is planning an IPO now:
It is not a great market for IPOs, and I think tech company IPOs in the past few months haven’t done as well as their founders and their CEOs would have hoped, but I think there’s some interesting timing at play here. You know, Jack Dorsey basically caved in to the pressure and took over as Twitter CEO. And it’s possible, certainly with the financial turmoil taking place at Square, that the company thought this was a good time to raise this money, raise this capital, double down on the business and get the IPO off of Jack’s plate.
On the company’s health:
You know, it’s losing money, there’s no question about that. So far, in 2015, Square has lost about $77 million. And there is not a clear path to profitability. So they have a great valuation and investors seem pretty confident, but just as recently as this time last year, there were discussions where it might be looking to sell itself, that the financial situation had gotten that bad. They have definitely renegotiated some deals, they’re trying to put themselves in a better position, but I would say that it’s far from a slam dunk.
On the filing saying that employees may get so rich, they’ll leave the company:
That’s the Bay Area talking. I think so many companies in the Bay Area struggle with that or struggle with losing employees to companies that might get richer. I think given some of the issues facing Square, that may fall more into the wishful thinking category.
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