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Twitter has finalized its share price for tomorrow’s initial public offering at $26. This will enable the company to raise close to $2 billion, significantly higher than the $1.4 billion to $1.7 billion that Twitter initially filed for, and this will give Twitter a stock market valuation of about $14 billion.
In addition, the new share price will make this the second-biggest internet IPO of all time — behind Facebook but ahead of Google.
Initially, Twitter had said that it would price the offering at between $17 and $20. A typical investment bank strategy, however, is to underprice an offering at the beginning, gauge how much demand there is, and increase the price if a large number of investors are interested enough in the stock to indicate that they will be buying.
Which means, likely, that Twitter’s investor roadshow was a major success.
At $26, Twitter will raise $1.82 billion, precisely, but it could stand to gain much more if there’s a significant pop to the shares on opening day. And based on gray market action, it looks like the financial community believes that TWTR could jump to $43.60 at the end of opening day.
At $26, Twitter cofounder Evan Williams will own almost $2 billion of compny stock, while Jack Dorsey, now CEO of Square, will own just under $1 billion. At $26 a share, Twitter will have a valuation of about $14 billion, which puts it below LinkedIn, which has a market cap of $26 billion, and far below social cousin Facebook, which is currently worth over $120 billion.
It could become worth much more, though — Topeka Capital analyst Victor Anthony has a price target of $54 a share, and RBC Capital’s Mark Mahaney has a more sober $33 target. At $54 per share, Twitter would be worth about $30 billion.
The social network currently has 230 million monthly active users, and 100 million daily active users. Twitter users publish 500 million tweets a day on the site and its apps.
Twitter is a real-time information network that connects you to the latest information about what you find interesting. Simply find the public streams you find most compelling and follow the conversations.
At the heart of Twitter ar... read more »
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