Twitter has set a price range of $17 to $20 per share for its initial public offering and says it could raise as much as $1.6 billion in the process. The pricing is relatively conservative considering that Twitter is poised to pull off the year’s hottest IPO.
Twitter Inc. said in a regulatory filing Thursday that it will put forth 70 million shares in the offering. If all the shares are sold, the underwriters can buy another 10.5 million shares.
At the $20 share price, Twitter’s market value would be around $12.5 billion, roughly one-tenth of Facebook’s current valuation. Twitter’s value is based on 625.2 million outstanding shares expected after the offering, including restricted stock units and stock options.
The San Francisco-based short-messaging service plans to list its stock under the ticker symbol “TWTR” on the New York Stock Exchange. The shares will likely start trading in early November. Twitter will begin its IPO “roadshow” as early as Friday, meeting with prospective investors to pitch its stock.
The company’s valuation is conservative. Some analysts had expected the figure to be as high as $20 billion. Back in August Twitter priced some of its employee stock options at $20.62, based on an appraisal by an investment firm.
Other publicly traded companies in the $12 billion range include tool maker Stanley Black & Decker and pharmaceutical company Forest Laboratories. LinkedIn Corp., meanwhile, stands around $27 billion based on its closing stock price Thursday.
Twitter’s caution suggests that the company learned from Facebook’s rocky initial public offering last year. Rather than set expectations too high, Twitter is playing it safe and will very likely raise its price range closer to the IPO, and thus fuel demand.
Facebook’s IPO was marred by technical glitches on the Nasdaq Stock Exchange in May of 2012. As a result, the Securities and Exchange Commission fined Nasdaq $10 million, the largest ever levied against an exchange. Those problems likely led Twitter to the NYSE.
Last week, Twitter disclosed that it lost $65 million in the third quarter, three times as much as in the same period a year earlier. It was the company’s biggest quarterly loss since 2010. Founded in 2006, Twitter has never posted a profit, but its revenue is growing. Revenue for the latest quarter more than doubled from the same period last year, to nearly $169 million.
The IPO has been long expected. The company has been adding to its arsenal of advertising products and working to boost ad revenue in preparation. Still, it’s ad revenue is small compared with Facebook. Twitter says it has more than 230 million monthly users, compared with Facebook’s roughly 1.2 billion.
A big part of Twitter’s appeal is in its simplicity and public nature. Users can send short messages that consist of up to 140 characters. Anyone can “follow” anyone else, but the relationship doesn’t have to be reciprocal, which makes the service especially attractive for celebrities and companies that use Twitter to communicate directly with fans and customers.
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AP Technology Writer Michael Liedtke contributed to this story from San Francisco.
A Closer Look At Proposed Measures Designed To Curb Google’s Search Monopoly
U.S. regulators are proposing aggressive measures to restore competition to the online search market after a federal judge ruled Google maintained an illegal monopoly for the last decade.
The sweeping set of recommendations filed late Wednesday by the U.S. Department of Justice could radically alter Google's business, including possibly spinning off the Chrome web browser and syndicating its search data to competitors. Even if the courts adopt the blueprint, Google isn't likely to make any significant changes until 2026 at the earliest, because of the legal system's slow-moving wheels.
Here's what it all means:
What is the Justice Department's goal?
Federal prosecutors are cracking down on Google in a case originally filed during near the end of then-President Donald Trump's first term. Officials say the main goal of these proposals is to get Google to stop leveraging its dominant search engine to illegally squelch competition and stifle innovation.
"The playing field is not level because of Google's conduct, and Google's quality reflects the ill-gotten gains of an advantage illegally acquired," the Justice Department asserted in its recommendations. "The remedy must close this gap and deprive Google of these advantages."
Not surprisingly, Google sees things much differently. The Justice Department's "wildly overbroad proposal goes miles beyond the Court's decision," Kent Walker, Google's chief legal officer, asserted in a blog post. "It would break a range of Google products — even beyond search — that people love and find helpful in their everyday lives."
It's still possible that the Justice Department could ease off on its attempts to break up Google, especially if President-elect Donald Trump... Read More