Twitter set a range of possible prices for its initial share price yesterday. While the market is eager and waiting for the IPO, analysts believe that the price is lower than expectations. The social media giant plans to sell 70 million shares within their price range of $17 to $20 dollars. With an average price, the shares should bring in about $1.3 billion and would bring Twitter’s valuation to $10 billion, excluding options. Including convertible stocks, restricted stocks, and options, the company’s valuation would be more than $12 billion.
At that rate, compared to the days of the beginning of the internet, AOL would have been only 30% of the valuation of Twitter, which is considerable, as AOL was a giant in its day. Still though, compared to Facebook, Twitter is still very small, as Facebook’s valuation is at $127 billion. Twitter has come a long way in the six years of its operation, transforming into a small “micro-messaging company” into a celebrity home, a reality star home, and a billion dollar publically traded company. According to the NY Times, Twitter’s pricing of its shares before its IPO, “is the last major piece of information that Twitter will disclose before it kicks off a road show for investors on Monday.”
The company is expected to start its first trading day on the New York Stock Exchange on Nov. 6, trading under the ticker symbol TWTR. Though the public can own a piece of Twitter, more than half of the company’s equity will belong to early investors, venture capital, and “insiders.”
Considering the fiasco with Facebook’s debut and the pricing mishaps that occurred in 2012, Twitter is potentially being issuing at a discount; investors likely will not tolerate too high of a share price at issuance. Analysts feel that a conservative view is the correct one, while growth could be estimated at 20%. While there is a chance of a “pop or a jump in price on the first day of trading,” that scenario is highly tolerable relative to a price drop as what happened with Facebook.
Image Credit: Twitter