Squarespace Goes Public Via Direct Listing
Website Builder Valued at $7.4 Billion
Squarespace (SQSP) was given a reference price of $50 per share by the New York Stock Exchange for its direct listing. This gives the website-building company a market value of $7.4 billion.
Squarespace is among a growing list of tech companies which have gone public via a direct listing. Coinbase’s (COIN) $85 billion public debut was through a direct listing. Roblox (RBLX), Palantir Technologies (PLTR), and Asana (ASAN) also used this strategy. With a direct listing, a private company can go public without raising additional capital. Investors who hold shares sell them directly to the public with a direct listing. Shareholders typically include investors, employees, and promoters.
Squarespace is already generating a buzz with investors. In March the company raised $300 million, giving it a $10 billion valuation at the time. Squarespace’s revenue growth was up 28% in 2020. The company did post a net loss of $10.1 million for the first quarter, which is wider than the $1.1 million loss for the previous year. For the last three quarters of 2020, Squarespace was profitable.
The website company has several competitors vying for market share. Wix.com (WIX), Square (SQ), and Shopify (SHOP) are some of the big ones. Squarespace’s recent $415 million acquisition of Tock, a platform which enables restaurant and hospitality companies to manage reservations, takeout, and ticket sales, may give it an edge over some of those rivals.
Will Pandemic Demand Continue?
Squarespace has seen demand for its services surge during the pandemic. When businesses were shutting down brick and mortar stores, many business owners rushed to create websites. Companies like Squarespace were ready to help.
The startup offers tools to help small businesses with ecommerce operations. It also works with big businesses to help them create direct relationships with consumers. Squarespace charges on a subscription basis. Last year it added around 700,000 new unique subscribers, and more than two-thirds of its subscriptions are paid annually.
As small businesses welcome customers back to their brick and mortar stores, demand for Squarespace’s services could decline somewhat. But it is also possible that customers and businesses will stick to many of the ecommerce habits they formed during the pandemic.
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