
Square stock drops 10%, is now less than IPO price - boomzilla
http://www.google.com/finance?q=NYSE%3ASQ
======
dantillberg
Well, the NASDAQ[0] and DJIA[1] are both off 3% for the day right now, along
with every other index around the world. Or, to talk about price movements
that are probably a bit more noteworthy, crude oil futures on NYMEX[2] are
down ~7%.

It's been kind of a (minor) bloodbath so far in the markets today. So, a 10%
drop for a young, growth-oriented company is not terribly surprising on a day
like today, I'd think.

0:
[https://www.google.com/finance?cid=13756934](https://www.google.com/finance?cid=13756934)

1:
[https://www.google.com/finance?q=INDEXDJX%3A.DJI](https://www.google.com/finance?q=INDEXDJX%3A.DJI)

2:
[http://www.marketwatch.com/investing/future/clg6](http://www.marketwatch.com/investing/future/clg6)

~~~
boomzilla
Well, for some people, myself included, the not-going-so-well recent IPOs
(Square, Box, etc.) would help deflate the pressure on housing prices in
SF/BA. I feel for the workers at these company, but it's becoming impossible
to raise a family here when the rent/mortgage is creeping up to more than half
of most people's salary.

~~~
dantillberg
Ha, yes. I don't own a home, but I would like to someday, so I'm always
confused how news about falling home prices is treated as "bad" in general in
the media. For me, I celebrate the news. I want housing prices to go kaboom so
I can afford one.

~~~
JonFish85
The problem with that though is that housing prices are tightly tied to
surrounding economic factors. You could go to some crappy neighborhood in a
depressed area of the USA and get a great house for "nothing" (relative to,
say, CA). If housing prices go kaboom, it's likely because there aren't as
many people moving there, and people aren't moving there because there aren't
jobs that can support people.

And be careful what you wish for, because once you _do_ own that house, if the
prices continue to fall, you could be underwater fairly easily. If a $1m place
falls to $750k, which you can afford, but then the economy continues to
stutter, it could fall to $500k or $350k. Remember that your mortgage doesn't
reflect what you could sell your house for, once you sign the papers, you're
on the hook for it.

~~~
ryanSrich
> The problem with that though is that housing prices are tightly tied to
> surrounding economic factors

I really question what those economic factors are though. For SF it's clearly
the availability of high paying jobs. However in Portland, OR (where I live)
there are little to no high paying tech jobs available, and yet the housing
prices are sky rocketing to levels never seen before.

Given my basic understanding of economics the current climate makes absolutely
no sense. Wages have been stagnate for years, college grads have no career
outlook (outstanding student debt is now $1.2 trillion), and prices for
everything (except for oil) are higher than ever. I've seen friends empty
their bank accounts just to pay rent. The concept of savings or retirement for
millennial might as well not even exist.

~~~
eldavido
> The concept of savings or retirement for millennial might as well not even
> exist.

Probably not a popular view, but I think there's some truth to it. Check out
the Harvard JCHS article [1], more households are paying 30, 40, and even 50%
of their salaries for rent than ever before.

Major shifts like this can only be explained by culture, IMO. Maybe the US is
undergoing a major shift toward wanting to live in city centers, even at the
cost of saving for the future? Or people in certain metros just think they're
that exceptional / special / etc. that they "deserve" to live in a certain
place? Or everyone in a high-ambition career think they don't need to save
because they'll "make it" (maybe true?) and will have fuck-you money in a few
years?

It's a big change from the past, that's for sure.

[1]
[http://www.jchs.harvard.edu/research/publications/projecting...](http://www.jchs.harvard.edu/research/publications/projecting-
trends-severely-cost-burdened-renters-2015%E2%80%932025)

~~~
floppydisk
Tangentially, the cost of paying a mortgage is comparable to or cheaper than
paying rent in the metro areas I've priced. The problem is getting enough of a
% downpayment saved to "unlock" the house purchase option.

People I've known who bought houses look at it as locking a "rent rate" in for
30 years and assuming the burden of maintenance rather than riding the
fluctuating markets. Right now, they're locked in at lower rates than other
people I know are paying in rent to live in a similar area.

I willing to wager part of the problem is the lockdown on lending after 07/08
and more people got pushed into the rent market because they couldn't get the
loans to purchase a house which has led to the inversion of the cost of owning
vs renting. Historically, owning has been more expensive than renting in most
places

------
gtrubetskoy
All the food trucks, street and market vendors, estate and yard sales,
handymen, etc I see accept credit cards using Square. If they figure out how
to hang on to this market and grow as these little vendors grow then they're
in good shape. Being down 10% when the Dow is down 400+ points for days on is
not unusual.

The big question is - who is Square competing with.

~~~
dasil003
If the tech bubble bursts I'm not sure who is going to be buying the $15,
undersized lunches that the new wave of food trucks is flooding the market
with.

~~~
JBReefer
Maybe in SF, but not in the rest of the world. Even here in Silicon Alley,
we're a small piece of a very large pie.

~~~
anjc
It's the opposite surely. Some of the companies and concepts that seem to
survive in SF are considered barmey in other wealthy western cities. Startups
whose customers are other startups..

------
tyingq
For comparison, Paypal is down 5%, Capital One is down 5.24%, Intuit down
2.24%, Visa down 3%, Amazon down 4.4%.

Not to say that a 10% drop isn't notable, but the whole market is taking a
beating today.

~~~
guava
Additional noteworthy drops are Tesla (-5.93%) and Netflix (-7.12%).

------
brainflake
Everything is down. This is almost certainly related to macro signals and not
Square itself. Smaller cap stocks tend to have higher volatility and will
normally take a heavier beating than larger cap ones.

~~~
elif
Coins are up 8.3% on the day, which is strange considering all the bandwagon
press universally condemning it.

Some of it is correction, but I think generally more people are starting to
treat it as a hedge against general global markets--as a haven like gold.

~~~
bdcravens
You mean Bitcoin? Probably best to refer to it unambiguously.

~~~
elif
I was being intentionally coy to avoid replies from people not interested in
what i was actually saying, but in bitcoin flamewars.

------
Silfen
Someone with a little more knowledge of financial markets, help me out here.
Is it really news if a tech company's stock drops 8-10% on a day when NASDAQ
is down over 3%?

~~~
smileysteve
Mostly if we're discussing how equity compensation might not be the best
option. Or how preferred investors and founders took what they could from the
workers (in response to "refragmentation").

The Square IPO was less than employees who started after their last round and
preferences made it even worse, meaning even though there is a liquidity
event, employees who took options are out. With this significant drop, other
employees who exercised their options (and paid taxes) are also out.

~~~
aneesh
How did preferences make it worse? Generally, preferred shares convert to
common in the event of an IPO, so preferences are discarded.

~~~
smileysteve
> With Square, investors were guaranteed a 20 percent premium on their
> investment, which would be worth $18.56 a share, meaning Square had to issue
> more shares to those investors, further devaluing the stock owned by
> employees.

[http://www.bloomberg.com/news/articles/2015-11-19/square-
emp...](http://www.bloomberg.com/news/articles/2015-11-19/square-employees-
find-some-of-their-stock-options-under-water)

------
bhouston
Shopify is down more than 50% from its high and below its IPO offering price
as well:

[https://www.google.com/finance?q=NYSE%3ASHOP](https://www.google.com/finance?q=NYSE%3ASHOP)

------
sakopov
Does this have anything to do with Square? Everything looks bad right now. I'm
surprised MSFT hasn't tanked like all other Tech stocks.

~~~
bkjelden
$MSFT is still down ~12% from late December:
[http://finance.yahoo.com/q?s=msft](http://finance.yahoo.com/q?s=msft)

It's not doing too poorly today, but it's not been immune to the larger macro
trends of the last month.

------
atom_enger
Can someone help explain what this means? Is there something about Square that
we can attribute this to? Did they make a mistake? Were they overvalued to
begin with?

I've spent the last year trying to understand the whole private-to-public
process and I'm curious what this means for Square and other companies like
Etsy who are experiencing the same drop in stock price.

~~~
mdjt
I don't think Square was overvalued at IPO. As for today's drop: the fall in
oil has hit everyone, unfortunately Square's fall of around 8% is worse than
most. For Example today AMZN saw a drop of around 4% and TSLA is down 5.5%.

Don't be wary ;)

~~~
atom_enger
Interesting that a drop in oil price would correlate. Why is this and how does
it impact a completely unrelated industry?

~~~
dantillberg
I'm not an economist, but my understanding is that the price of oil does not
directly impact the valuation of these companies, per se, but that growth-
oriented companies (especially) and oil sales depend on a strong global
economy.

When the price of oil falls, that indicates that people are pulling back on
oil/gas/etc purchases due to constrained budgets, reduced business/operations,
etc. (and/or that people buying the oil predict that others will cut back on
those things in the near future)

~~~
ZanyProgrammer
I'd think its because of the increased supply of oil.

------
ck2
To be fair, google is tanking too
[http://www.google.com/finance?q=goog](http://www.google.com/finance?q=goog)

Whole market is going nuts over the possibility of $10/barrel oil and overly
strong US dollar

------
Animats
What's Square going to do when Apple gets rid of the headphone connector?

~~~
urda
They already started to move away from the headphone connector completely,
well assuming you have NFC or a chip'd card.

[https://squareup.com/contactless-chip-
reader](https://squareup.com/contactless-chip-reader)

------
cs702
As stock market valuations of recently public companies like Square go, so do
private market valuations of pre-IPO companies.

In other words, as you read this, unicorn valuations are getting less
"unicorny," so to speak.

------
Mikeb85
And now they're down 1.3%. Whole market bouncing back.

------
paulpauper
more like rectangle - cut in half

