Peter Kafka

Recent Posts by Peter Kafka

Twitter Prices Its IPO at a Conservative $11 Billion

TwitterIPOTwitter said it is looking to sell its shares for $17 to $20 each in its upcoming public offering. If the company sells at the top end of its range, it would raise $1.6 billion in its IPO, and value the company at around $11 billion.

That $20 figure is significant because it’s less than the $20.62 value Twitter assigned to its shares on August 5, the last time the company went through a valuation before letting the public take a look at its financials.

For comparison’s sake: At the end of January 2012, Facebook valued its shares at $30.73; in May of that year, the company went public at $38 a share.

A reasonable conclusion to draw from this is that Twitter is trying to be extra conservative in its runup to the IPO.

Twitter is about to start a formal “road show” with institutional investors, and it may well end up bumping up that price based on the signals it gets during that process. On the other hand, it will work very hard to avoid lowering that proposed price before the IPO, given the bad mojo that would signal; the worst-case scenario would be a repeat of last year’s Facebook IPO, where shares ended up trading below the initial price shortly after their debut.

Also worth noting: When Twitter finishes acquiring MoPub, the mobile ad company it agreed to buy earlier this fall, it will add another 15 million shares to the company’s pool of 545 million shares outstanding; that could end up pressuring the share price in the early going.


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