Squarespace IPO Leaves Space for Questioning

This past week, Squarespace (SQSP) went public through a direct listing on the NYSE. This means that the company bypassed traditional Wall Street investment bankers and issued shares directly to the public. As a result, the proceeds went to…

the insiders, not to the company. (See IPO calendar on TipRanks)

Squarespace operates a leading platform to create websites and apps. While the industry has been around since the early days of the internet, the company has carved out a niche as a provider of easy-to-use tools to allow for immersive designs.

As the IPO document explains, “We believe design is not a luxury. Our beautifully-designed, award-winning templates enable our customers to look professional from the start, while also providing deep levels of customization so that no two websites look alike. This empowers our customers to stand out and express their story and brand in a beautiful, engaging and consistent way across digital channels, including websites, social media and Email Campaigns, among others.”

Nonetheless, the reception for the IPO was icy. On the first day of trading, shares of Squarespace plunged by about 13% to $43.65. This put the market capitalization at $6.4 billion. Earlier in the year, the company had pulled off a secondary offering of securities at a $10.2 billion valuation.

Despite the disappointing numbers, Squarespace’s ability to complete the deal was a major achievement. Given the wrenching volatility in the markets, various companies have postponed their deals.

Company Background

In 2004, Anthony Casalena founded Squarespace while he was at the University of Maryland. The initial business was a blog, and he grew the company organically until 2015. That’s when he raised the first round of venture capital of $78.5 million.

Currently, Squarespace is a full-blown platform that offers hosting and…

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