Last month Allera Capital predicted that there were likely to be few more Tech companies going public this year, this may have changed slightly however as there was three last Thursday, which could possibly kick start the sector. Allera’s analysts believe the omens look good for Square and believe it could be a potential long term money-spinner and have been advising its clients likewise. Although it has dipped from its first day return of 45.2% Allera Capital believe it has now settled to close to what was expected to be its proposed IPO range of $11 to $13 and is now the time to buy.
Square’s IPO price was $9 a share, giving the company a value of $2.66 billion. They actually raised $6 billion last year in their final round of private equity fundraising, over double the value at $9 a share, there is obviously profit seen in the company. Allera Capital sees Square as a typical tech IPO company but with a massive ready formed market to tap into. So far they have reached approximately 14% of the U.S. credit card processing market giving them a client base of around 2 million and a huge market left to aim at.
Square has recently started its expansion abroad and on an operating basis has now become profitable. They are also expected to improve their profit margins significantly as they grow. What has been the best model for tech IPOs over the last decade or so has been to be disruptive while doing things at a lower cost and faster.
Allera Capitals senior analysts said that it is looking like Square will reach $1 billion in sales for the year if it continues along the same vein giving it a healthy valuation of under four times its revenue. Square’s main advantage over its competitors is its flexibility and charges, which are 2.75% of sales for everything related to the proc