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Can Squarespace dodge the direct-listing value trap?

May 19, 2021 by Alex Wilhelm

This post is by Alex Wilhelm from Fundings & Exits – TechCrunch


It’s Squarespace direct-listing day, and the SMB web hosting and design shop’s reference price has been set at $50 per share.

According to quick math from the IPO-watching group Renaissance Capital, Squarespace is worth $7.4 billion at that price, calculated using a fully diluted share count. The company’s new valuation is sharply under where Squarespace raised capital in March, when it added $300 million to its accounts at a $10 billion post-money valuation, according to Crunchbase data.


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The company’s reference price, however, is just that: a reference. It doesn’t mean that much. As we’ve seen from other notable direct listings, a company’s opening price does not necessarily align with its formal reference price. Until Squarespace opens, whether it will be valued at a discount to its final private price is unclear.

While the benefits of a direct listing are understood, the post-listing performance for well-known direct listings is less obvious. Indeed, Coinbase is currently under its reference price after starting its life as a public company at a far-richer figure, and Spotify’s share price is middling at best compared to its 2018-era direct-listing reference price.

This morning, we’re going over Squarespace’s recently disclosed Q2 and full-2021 guidance. Then we’ll ask how its expectations compare to its reference price-defined pre-trading valuation. Finally, we’ll set some stakes in the ground regarding historical direct-listing results and what we might expect (Read more...)

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