Twitter hopes to sell as many as 80.5 million shares priced at $17 to $20 each under its impending initial public offering (IPO), according to an SEC filing that took place yesterday.
The social media platform could therefore raise up to $1.4 billion. It will initially sell 70 million shares, followed by an additional 10.5 million if the stock performs well once it begins trading.
A valuation based on the $18.50 middle-of-the-price range of the IPO, would put Twitter at a value of $10.08 billion. At the high end of its range, an $11.1 billion value is suggested.
Analysts and investors believe that Twitter is taking a cautious route in its road to going public. The company wants to avoid the dip in prices that Facebook suffered following its listing in May 2012.
Facebook’s shares were initially priced at $38 per share. The stock rocketed within hours of first trading and hit a high of $45. Not long later, it fell into a downward spiral. Analysts and investors blamed the slump on an overpricing of the shares. Since then, the shares have recouped and are now trading above the listing price. Whatever the reason for Facebook’s initial pitfall, Twitter does not want to risk the same mistake.
“Twitter is not going to price this thing to get every single dollar off the table. They want to price it so the stock goes up on the first day, at least,” says Dan Niles, chief investment officer of tech-focused hedge fund firm AlphaOne Capital Partners.
“A valuation of $10 billion is very reasonable, unlike Facebook, the IPO should go reasonably well,” he adds.
According to Dow Jones Newswires, Twitter is expected to price on November 6 and will likely begin trading on the New York Stock Exchange on November 7.