Twitter Boosts IPO Price for Valuation Up to $13.6 Billion
Twitter raised the price of shares in its initial public offering by as much 25%, putting it on track to raise $1.75 billion amid brisk demand.
The microblogging site is offering 70 million shares for $23 to $25 each, a regulatory filing today shows, indicating a market value of as much as $13.6 billion. Twitter had earlier proposed selling shares for $17 to $20 apiece.
"This number is still a reasonable and doable valuation, and I don't think it's going to turn people off," said Santosh Rao, an analyst at Greencrest Capital Management LLC. "We've seen this before, where companies start off with a low number to get people interested, and then work higher. The demand is there as this is the last of the big three social networks to go public."
Twitter has attracted more than enough interest to sell all shares in its IPO before bankers started officially taking orders for them, people with knowledge of the matter have said. Chief Executive Officer Dick Costolo has been traveling to major U.S. cities to drum up interest for the stock, and making the case that the unprofitable company needs to spend to improve its advertising products, grow its user base and enhance its infrastructure.
At the top of the range, San Franciso-based Twitter would be valued at 11.8 times estimated sales in 2014 of $1.15 billion, up from about 9.5 times in the initial terms, according to analyst projections compiled by Bloomberg. That compares with Facebook Inc.'s 11.5 times sales and LinkedIn Corp.'s 12.2 times, the data show.
Twitter has so far been conservative in its pricing and in its IPO process, choosing to file confidentially with the U.S. Securities and Exchange Commission before making its prospectus public. By raising the price, Twitter is giving in to demand while seeking to avoid a market debut like that of Facebook.
As analysts, investors and reporters pored over the company's prospectus, Facebook raised the price of its offering and ended up in a range that exceeded market demand, causing the stock to drop below the offering price and take more than a year to recover.
Twitter is set to price its shares on Nov. 6 and begin trading under the symbol TWTR on the New York Stock Exchange the next day. Goldman Sachs Group Inc. is leading the offering, working with Morgan Stanley and JPMorgan Chase & Co.
-- Bloomberg News --