Twitter seeks $13 billion valuation in IPO
ALEXEI ORESKOVIC AND GERRY SHIH
Seeking to avoid a repeat of Facebook's much-maligned public debut, Twitter has revealed more modest ambitions, saying its initial public offering would raise up to US$1.6 billion (NZ$1.9 billion) and value the company at up to US$10.9 billion (NZ$13 billion).
The valuation was more conservative than the US$15 billion some analysts had expected for the social media phenomenon.
Twitter, which has signalled for weeks it would price its IPO conservatively to avoid the stock drop that marred Facebook's offering, said it intends to sell 70 million shares priced between US$17 and US$20.
If the company's underwriters choose to sell an additional allotment of 10.5 million shares, Twitter could raise as much as US$1.6 billion at the top of the price range, according to an amended version of its prospectus filed on Thursday.
Twitter is expected to set the price on November 6, according to a document, suggesting the stock could begin trading as early as November 7.
"It's conservative and likely going to be raised as they start the road show at least once if not twice," Sam Hamadeh of PrivCo, a private company research firm, said of Twitter's pricing.
"The size of the offering is also a bit small," he added. "But they may only choose to raise the price once they gauge investor demand. Raising both the price and the size was Facebook's fatal mistake."
Twitter said there will be 544,696,816 shares of its common stock outstanding after the offering.
The company's offering is the most high-profile internet IPO since Facebook's rocky debut in May 2012, in which the company's shares fell below their offering price in the ensuing days.
Twitter and its underwriters will begin a two-week road show on October 28 in New York and will stop in Boston and the mid-Atlantic region before touching down in Chicago, San Francisco, Los Angeles and Denver, according to a source familiar with the offering.
The company could choose to raise the price of the offering during that period after gauging investor interest. In the case of Facebook, the company initially priced its shares at a minimum of US$28 before ultimately raising it to US$38 shortly before listing. Aside from raising the share price, Facebook also increased the size of its float - something that one out of 20 companies choose to do before their IPO, according to Hamadeh.
Twitter, which has about 230 million active users, has said it plans to list its stock under the "TWTR" symbol on the New York Stock Exchange.
The eight-year-old company more than doubled its third-quarter revenue to US$168.6 million, but net losses widened to US$64.6 million in the September quarter, it disclosed in a filing earlier this month.