Twitter鈥檚 US$1.6b IPO seen as modest
Print Edition
Seeking to avoid a repeat of Facebook Inc’s much-maligned public debut, Twitter Inc revealed more modest ambitions, saying its initial public offering would raise up to US$1.6 billion and value the company at up to about US$11 billion.
The valuation was more conservative than the US$15 billion some analysts had expected for the social media phenomenon, potentially attracting investors who might consider the money-losing company’s listing price a better deal, with room to rise.
Twitter had signaled for weeks it would price its IPO modestly to avoid the sort of stock plummet that spoiled Facebook’s coming-out party. Twitter said on Thursday that it intends to sell 70 million shares between US$17 and US$20 apiece, raking in up to US$1.4 billion for the company.
If underwriters choose to sell an additional allotment of 10.5 million shares, the offer could raise as much as US$1.6 billion.
Twitter’s offering will be the most high-profile Internet IPO since Facebook’s May 2012 debut, when the social network giant’s shares fell below their offering price and did not recover until a year later. Still, the modest pricing doesn’t obscure questions about Twitter’s profitability.
“The fact that the valuation is lower than expectations, I think was smart by the underwriters. I think it will help the pop,” said Michael Yoshikami of Destinational Weath Management.
“But in the end, even for US$11 billion, the question is can they come up with earnings to substantiate that number? And it’s unclear that they’re going to be able to do that.”
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