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Square reveals share price for IPO as valuation gets chopped

Square hopes to raise just more than $400 million at a valuation of about $4.2 billion -- far less than the $6 billion valuation the company garnered from its last round of private funding.

Square plans on pricing its initial public offering between $11 and $13 a share, according to a new S1 filing submitted to the Securities and Exchange Commission on Friday.

The mobile payments company plans to offer up 31 million shares of, which, at its maximum price point, would help Square raise just more than $400 million at a valuation of about $4.2 billion.

The valuation is notable, as it prices Square below its last round of private funding. In its final Series E investment, Square garnered a $6 billion valuation with shares priced at $15.50.

When Square's long anticipated IPO finally arrives, shares will trade on the New York Stock Exchange under the ticker symbol SQ.

Buried in the S1's fine print, Square it says it has agreed to sell 2.27 million shares of Series D stock held by Starbucks for $37 million, which comes out to $16.80 per share -- well above the current IPO pricing. If the the shares fail to raise $37 million for Starbucks, Square has to make up the difference by next October.

Square initially launched in 2009 as a mobile payments hardware company, but has since branched out from its payments roots to become a small business services provider.

For instance, back in June the company started offering a payroll service to users of Square Register, which now offers a range of revenue-generating add-ons, like an invoice feature, an online scheduling tool for SMBs, and an order-ahead function dubbed Pickup.

Still, Square revealed in its initial S-1 that 95 percent of its revenue derives from digital payments and point-of-sale (POS) services -- including sales from its soon-to-be axed collaboration with Starbucks.

And revenue is big problem for the company. Last year, Square reported total revenue of $850.2 million, up 54 percent annually. For the first half of 2015, Square's revenue reached $560.6 million, an increase of 51 percent year-over-year.

But those numbers still haven't done very much to improve profits, as Square continues to generate significant losses.

During the first six months of 2015, Square reported a net loss of $77.6 million. During the same six-month period in 2014, Square took a loss of $79.4 million. Square's total net losses for 2014 were $154.1 million, up significantly from net losses of $104.5 million in 2013.

Overall, Square has piled up a deficit of nearly a half billion dollars since its inception. All things considered, Square could be in for a tough sell to investors come IPO time.