Twitter IPO looks imminent, at higher price

Nov 06, 2013 by Sophie Estienne
A sign is posted outside of the Twitter headquarters on October 25, 2013 in San Francisco, California

Twitter was on the verge of revealing the price of its stock offering Wednesday, giving the popular messaging platform a value of around $15 billion, media reports said.

The Wall Street Journal and CNBC, citing unnamed sources, said the initial public offering was likely to be at $27 a share, higher than the just-increased range of $23 to $25.

CNBC said three people familiar with the IPO indicated the underwriters had set the $27 price. The Journal said that is the most likely price, but that a range of $25 to 28 was still being debated.

Twitter plans to sell 70 million shares, with a possible over-allotment of 10.5 million. With that option, it would raise more than $2.17 billion, or $1.89 billion without the extra shares.

With the over-allotment it would be the second-biggest tech IPO after Facebook's $16 billion effort last year and ahead of Google's 2004 offer, which raised $1.92 billion, according to research firm Dealogic.

Shares will trade under the symbol TWTR on the New York Stock Exchange.

Analysts said Twitter's first price range at $17 to $20 a share appeared conservative and that the price was likely to rise because of heavy demand.

Still, Twitter is taking a cautious approach in its IPO, in contrast to Facebook, which flooded the market with shares and saw a sharp decline in the following months.

Twitter still must convince investors of its business model, having lost more than $440 million since 2010.

But with 232 million users and growing, it is expected to be able to reach profitability by delivering ads in the form of promoted tweets, and from its data analytics.

The research firm eMarketer estimates Twitter will bring in $582.8 million in global ad revenue this year, and nearly $1 billion in 2014.

Twitter's IPO is the most keenly anticipated since Facebook's last year, with enthusiasm for the messaging service which has become engrained in popular culture and has become a tool for celebrities, journalists and politicians, among others,

According to IPO documents, Twitter has around 232 million monthly active users, three-fourths of whom are outside the United States.

Twitter says roughly 500 million tweets are sent every day, and that 76 percent of active users are on mobile devices such as smartphones or tablets.

Twitter must still convince investors of its business model, having lost more than $440 million since 2010.

Research firm eMarketer estimates Twitter will bring in $582.8 million in global ad revenue this year, and nearly $1 billion in 2014.

A research note from Topeka Capital Markets recommended the stock, with a target price of $54.

"A look back shows that consensus has underestimated social media financial performance," analyst Victor Anthony said in the note.

"Hence, we stand by our numbers, which are largely above official and unofficial estimates."

Other analysts are skeptical, saying Twitter's business model is unproven and that social media trends are too unpredictable to assume the service will continue to grow.

Explore further: Twitter hikes IPO share price range (Update 2)

add to favorites email to friend print save as pdf

Related Stories

Twitter hikes IPO share price range (Update 2)

Nov 04, 2013

Twitter boosted its public stock offering to as much as $2 billion Monday, suggesting strong demand for its shares and a higher overall value for the one-to-many messaging platform.

NYSE holds 'successful' test for Twitter IPO

Oct 27, 2013

The New York Stock Exchange said its test run of Twitter's initial public offering on Saturday was a success, as the exchange tries to avoid the technical problems that marred Facebook's debut last year.

Twitter to list on NYSE (Update)

Oct 15, 2013

Twitter shares will trade on the New York Stock Exchange, documents showed Tuesday, shunning the tech-heavy Nasdaq which saw major problems in Facebook's market debut in 2012.

A look at recent tech sector IPOs

Nov 04, 2013

Here is a look at notable tech companies that have conducted initial public offerings over the past two years ahead of Twitter's IPO:

Recommended for you

Ahead of Emmys, Netflix already winning online

9 hours ago

Even if it doesn't take home any of the major trophies at Monday's Emmy Awards, Netflix will have already proven itself the top winner in one regard: Internet programming.

Oregon sues Oracle over failed health care website

20 hours ago

Oregon Attorney General Ellen Rosenblum says she's filed a lawsuit against Oracle Corp. and several of its executives over the technology company's role in the state's troubled health insurance exchange.

Google buys product design firm Gecko

20 hours ago

Google on Friday confirmed that it bought Gecko Design to bolster its lab devoted to technology-advancing projects such as self-driving cars and Internet-linked Glass eyewear.

Ticketfly buying WillCall for on-premise data

Aug 21, 2014

Ticketfly Inc., a San Francisco-based technology company among several posing a challenge to Ticketmaster, is acquiring WillCall Inc., a crosstown rival that turns your smartphone into a mobile wallet at live events.

HP revenue inches up after years of decline

Aug 20, 2014

Hewlett-Packard on Wednesday reported that its quarterly revenue rose for the first time in three years, nudged by improved computer sales everywhere except Russia and China.

User comments : 0