Square set a price range for its IPO that puts a value of up to $4.2 billion on the mobile payments firm, a figure significantly below its Series E funding round a year ago.
The firm said it intends to price its initial public offering at between $11 and $13 a share, which is well below earlier estimates, as well as a lower level than a fundraising in late 2014.
At the midpoint of that range, Square will raise $372.6 million and be valued at $3.9 billion. The top end of the range is more than $4 billion.
In a round in October 2014, the firm pulled in $150 million from investors, giving it a value of $6 billion.
However, the amount raised is still well ahead of the $275 million Square suggested when its prospectus was published.
The conservative pricing suggests an eagerness to ensure shareholder interest in the IPO.
Despite being a fast-growing business, Square is loss-making. Its prospectus also highlighted risk factors, including the end of a transaction-processing contract with Starbucks, fraud costs and the position of Dorsey himself, who divides his time between Square and being CEO of Twitter.
The company has not revealed when its shares will start trading but it is likely to be ahead of the Thanksgiving holiday in late November.