Rare IPO Turnaround Square Shares Trading Debut

Andrew Gombert/European Pressphoto Agency

Square Shares Turn Over 1.7 Times in Debut - More than 47 million shares of Square Inc.SQ -1.68% changed hands on its first day of trading Thursday, more than 1.7-times the total number of shares sold by the payment-processing company in its initial public offering, according to FactSet.

That 1.7 ratio ranks it second-highest by that metric among the eight so-called unicorns that went public this year. Unicorns, in the parlance of Silicon Valley, are startups that reach valuations of at least $1 billion during pre-IPO private fundraising rounds.

The only unicorn with more first-day turnover in its shares (relative to shares sold) was Box Inc.BOX -3.66% And that doesn’t necessarily bode well for Square.

Box priced its IPO in January at $14 a share, above its range. Like Square, there was significant trading volume in its stock the first day of trading–Box shares traded 3.4-times the number of shares it offered. Also like Square, shares of Box priced below a recent fundraising round. And, like Square, shares popped in their first day of trading. Square shares rose 45% on Thursday. Box shares gained 66% in their debut.

Investors in Square should hope the similarities end there. Since Box’s strong debut, the stock has never returned to those lofty levels. In October, shares traded as low as $11.09. On Thursday they were trading at $13.39.

Equity capital markets traders said in general, it isn’t ideal to see more than an entire deal size trade over the same day, but said because of the dearth of strong IPO performances in the second half of the year, investors and traders may have been eager to lock in profits.

UPDATE: This post was updated to reflect that the turnover in Square shares was 1.7 on Thursday. Box turned over 3.4 times in its trading debut. An earlier version of this post said Square’s turnover was 2.7 and Box’s was 4.4.