Twitter revealed its plan to sell its stock at around $17 to $20 per share during its initial public offering (IPO) on its updated filing with the Securities and Exchange Commission (SEC) on Thursday. The company’s valuation is set at $10.9 billion, lower than the $15 billion estimate of Wall Street analysts.
The micro blogging company said it could raise as much as $1.6 billion from the offering. It is planning to sell 70 million shares and its underwriters have the option to sell an allotment of 10.5 million during the IPO.
Based on its filing, Twitter will set its stock price on November 6, which means the company might start trading its shares the following day. Twitter will be trading at the New York Stock Exchange (NYSE) under the ticker symbol TWTR.
Market observers believe that Twitter is pricing its stock conservatively because it does not want to experience the same fate happened to Facebook (NASDAQ:FB) when its stock declined significantly from its offering price at $38 a share. The decline was primarily attributed to the technical glitch during the IPO and then it was affected by investors’ concerns regarding its ability to boost revenue from mobile.
In an interview with CNBC, Sam Hamadeh, chief executive officer of private company research firm, PrivCo said the price range set by Twitter for the stock is very attractive and the valuation was conservative, but he projected that the price could go up.
Hamadeh said, “It’s conservative and likely going to be raised as they start the road show at least once if not twice. 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.” He added that Twitter seemed to be playing a scarcity playbook, and he would buy the stock.
Francis Gaskin, president of IPODesktop.com also expressed that he will definitely purchase Twitter’s stock at the price range set by the company. He said, “They’re picking a slightly lower valuation to ensure that the IPO goes up on the first day of trading.”
On the other hand, Gartner analyst Brian Blau opined, “Twitter has a very well-known brand around the world, and that alone is probably going to drive interest.”
Twitter will have 544,696,816 outstanding common stocks after the offering. Its IPO is one of the most highly anticipated this year given its popularity worldwide.
