Twitter Inc has set a price of US$26 per share for its initial public offering (IPO), which means the company’s stock could begin trading yesterday on the New York Stock Exchange in the most highly anticipated IPO since Facebook’s debut last year.
The price values Twitter at more than US$18 billion based on its outstanding stock, options and restricted stock that will be available after the IPO.
That is more than Macy’s, which has a market capitalization of US$17 billion, and Bed Bath & Beyond, which is about US$16 billion.
The pricing means the short messaging service will raise US$1.8 billion in the New York offering, before expenses.
The company is offering 70 million shares in the IPO, plus an option to buy another 10.5 million. If all the shares were sold, the IPO would raise US$2.09 billion, making it the biggest IPO for an Internet company since Facebook raised US$16 billion last year.
The company, named after the sound of a chirping bird, was set to begin trading yesterday morning under the ticker symbol “TWTR.”
Twitter’s public debut would be one of the most closely watched IPOs since Facebook’s in May last year, but Twitter has valued itself at just a fraction of Facebook and sought to cool expectations in the months and weeks leading up to the offering.
With that, the San Francisco-based company is likely hoping its stock avoids the fate of Facebook’s shares, which did not surpass their IPO price until more than a year after the offering.
Still, US$18 billion is a lofty valuation for Twitter compared with its peers.
At its current price, Twitter is valued at roughly 28 times its projected revenue this year — US$650 million based on its current growth rate. In comparison, Facebook trades at about 16 times its projected revenue this year, according to analyst forecasts from FactSet.
Google Inc, meanwhile, is trading at about seven times its net revenue, the figure Wall Street follows that excludes advertising commissions.
Research firm Outsell Inc puts Twitter’s fundamental value at about half of the IPO price, analyst Ken Doctor said.
Outsell’s figure is based on factors such as revenue and revenue growth.
“That’s not unusual,” Doctor said.
“Especially for tech companies. You are betting on a big future,” he said.