Twitter prices IPO at $26 a share

(MoneyWatch) Twitter late Wednesday priced its shares at $26, as the social networking firm prepares to go public tomorrow morning in the splashiest initial share offering since Facebook's (FB) May 2012 market debut.

That price came in above the microblogging firm's expected range, indicating strong investor demand for the company's stock. Twitter on Monday increased the range to between $23 and $25 after initially setting it at $17 to $20.

The company raised more than $1.8 billion in the offering. The $26 per share price values Twitter at more than $14 billion based on its outstanding stock, options and restricted stock that will be available after the IPO.

The San Francisco-based short messaging service is offering 70 million shares in the IPO, plus an option to buy another 10.5 million. It is set to begin trading Thursday morning on the New York Stock Exchange under the ticker symbol "TWTR."

Twitter's public debut is the most highly anticipated IPO since Facebook's IPO last year.

But Twitter has valued itself at just a fraction of Facebook and has sought to cool expectations. The company is likely hoping its stock will avoid the fate Facebook's shares, which didn't surpass their IPO price until more than a year after their offering.

Brian Blau, research director in consumer technology at Gartner, said Twitter has made progress turning its global popularity into a business and praised what he described as its formidable brand. But Twitter also faces major operational challenges, he added, noting that the service's growth has slowed of late.

Twitter also has tried to avoid the trouble that plagued Facebook's IPO, which was marred by technical glitches on the Nasdaq Stock Exchange. 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 New York Stock Exchange.

Earlier on Wednesday, Barclays Capital said Twitter had hired it to be its "designated market maker," a critical role when a stock starts trading. A DMM is an experienced trader who supervises the trading of a company's stock on the NYSE. If technical problems arise, the NYSE uses DMMs to bypass electronic trading systems, allowing humans to trade a company's stock. That is not possible on all-electronic stock exchanges such as the Nasdaq.

Twitter lets users send short messages, or "tweets," in 140-character bursts and has attracted world leaders, religious icons and celebrities, along with CEOs. It now has more than 230 million users, more than three-quarters of them outside the U.S. 

Although Twitter's mobile reach is impressive, it pales in number of smartphone users compared with industry rivals like Facebook, Google (GOOG) and Yahoo (YHOO), according to Morningstar equity analyst Rick Summers.

Comments

Follow Us