You can see that baby still in the capsule with the yolk coming out from the tentacles. When the squid is ready to hatch, the capsule and the chorion (which surrounds the embryo) are greatly thinned. However, they still present a considerable barrier. Squids have a hatching gland, called the organ of Hoyle, which produces an enzyme that dissolves the chorion and the capsule wall.
Here's a nice quick shot of a post-hatch baby. You can see some of the chromatophores, pigment-containing cells, as black dots on their body.
To round off this post, I thought I'd close with a video of those chromatophores in action!
