What's going on?

Jack Dorsey�s payment processing firm, Square, became a publicly traded�company on Thursday (valued at $3 billion). It had to value itself for less than it was hoping for � but the shares rallied 45% once they started trading.

What does this mean?

When a company �goes public� it means that its stock becomes widely available for investors to buy and sell (for a more in-depth explanation, check out our previous article on IPOs). This year, stock prices of new companies have often declined which has caused�investors to become more cautious. There is also concern that startups are being over-valued in the private market (companies can raise money from private investors, such as venture capitalists). Therefore, Square � a tech company that had achieved a high private valuation - was a big test for the IPO market. The result was sort of a mixed bag given that Square had to drop its �going public� price in order to lure investors but the stock performed well in the end (at least on�Day 1!).

Why should I care?

1. The bigger picture: Are unicorns real? No, silly, they�re a mythical creature. But startups with multi-billion valuations are very real. A�problem could emerge, though, if they�aren�t worth as much when they �go public� as during their private investment rounds. Square�s struggles highlight that issue because they (arguably)�were valued less on Thursday than as a private company.
2. For the stock: Payments is a big business; it�s unclear if Square is going to become a leader. Do you remember when you could pay for groceries with a cheque? Neither do we, but it wasn�t long ago that you could. Cash could, largely, disappear too - you�re more likely just to beep your credit card or iPhone. A few companies are probably going to make a lot of money processing those transactions � the big question is if Square will be one of them.