Square Inc’s initial public offering, priced at a 30 percent discount from the payments and lending company’s private valuation, is one of the loudest signals yet that technology firms are struggling to keep their multibillion-dollar market caps.
While some of these “unicorns” — private companies valued at US$1 billion or more — are set to buck that trend, bankers expect a procession of others to have to cut their values over the next year.
Investors have begun to price private companies more consistently with the public market, which has taken a more conservative approach to valuation.
Already this year, one-third of US-based tech companies that went public priced their shares below their private value, according to data provided by market intelligence company Ipreo Holdings LLC and data provider Pitchbook Data Inc.
A 30 percent drop puts Square’s valuation discount among the steepest since the start of last year, below the 40 percent of big-data company Hortonworks Inc and 32 percent for storage company Box Inc.
Square on Friday set a price range that values the company at up to US$4.2 billion, about a third less than the US$6 billion valuation at its last private fundraising.
The San Francisco-based company faces not only a market that has lost its appetite for stratospheric valuations, but also investor uncertainty about the company’s ability to compete in the crowded payments space as well as its leadership’s dedication. Square’s chief executive officer Jack Dorsey is also chief executive officer of Twitter Inc.
Square’s push to go public before the end of the year suggests that next year might be a more hostile environment to raise cash, according to bankers.
With its losses up and revenue growth slowing, analysts said Square needs the financing from an initial public offering.
The challenge of maintaining valuations goes beyond tech companies headed for Wall Street.
Within the past two months, many start-ups raising a Series B, or a funding round for mid-stage companies, have struggled to keep their valuations intact, Shasta Ventures co-founder Rob Coneybeer said.
“You are definitely seeing companies taking longer to raise money,” he said. “You are definitely seeing companies coming back to raise money at a lower valuation.”
Late-stage private companies are also finding it tougher to raise cash at the same valuation.
“If you’re an investor in the pre-initial public offering market, you’re going to start questioning your methodology,” Redpoint Ventures venture capitalist Tomasz Tunguz said.
“The valuation of the public market is ultimately the one that’s going to win,” he added.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”