News / Economy

    Twitter Boosts IPO Range Amid Strong Investor Demand

    An updated phone post on the floor of the New York Stock Exchange features a Twitter logo, Nov. 4, 2013, in New York.
    An updated phone post on the floor of the New York Stock Exchange features a Twitter logo, Nov. 4, 2013, in New York.
    Reuters
    Twitter Inc raised the top end of its IPO price range by 25 percent and will close its books a day early, signaling strong demand for the most closely watched Silicon Valley debut since Facebook Inc  last year.
     
    Amid a red-hot market for initial public offerings and soaring equity markets, Twitter raised its price range to $23-$25 per share on Monday, but kept the offering size at 70 million shares. That means it will raise up to $2 billion if an overallotment option of 10.5 million shares is exercised.
     
    Sources close to the situation said demand among institutional investors was so strong that the final pricing is likely to go even higher than the new range announced on Monday. The sources declined to be identified because the sales process is not public.
     
    The microblogging network, which has yet to turn a profit, has amassed 230 million users in seven years, including heads of state, celebrities and activists. About half of all U.S. adult Twitter users said they get news through the social media platform, according to a Pew Research survey.
     
    Twitter is the best known Silicon Valley company to go public since Facebook, though it is seeking a far smaller valuation of up to $13.6 billion compared to Facebook's $100 billion.
     
    One of the sources said Twitter's IPO is now “massively” oversubscribed and underwriters are looking to select investors who plan to hold the stock for a longer duration rather than traders wanting to do a quick flip.
     
    Some funds that ordinarily do not buy IPO shares were seeking allocations of up to 10 percent, but were unlikely to get them, according to the source who requested anonymity.
     
    Twitter plans to close the books on the IPO on Tuesday at 12 p.m. EST (1700 GMT), a day earlier than scheduled, because of strong demand, according to two sources with knowledge of the process.
     
    The IPO is set to price on Wednesday, with shares to begin trading on the New York Stock Exchange on Thursday. The previous price range was $17-$20 a share.
     
    The new pricing would value the company at up to $13.6 billion, or about 12.5-13.6 times forecast 2014 revenue of $1 billion, according to eMarketer. Both Facebook and LinkedIn Corp trade at about 12 times forecast 2014 revenue.
     
    Several equity research analysts said they expect Twitter shares to rise after they begin trading, with some setting their one-year price target as high as $52.
     
    “We would participate within the $23-$25 range, albeit, simple math would dictate that management should price at the bottom end of the new range,” BTIG's Richard Greenfield said in a note Monday after the price was raised.

    Red-hot market
     
    Year to date, 2013 has been the strongest for IPOs since 2007 in the United States, with more than 178 companies going public, according to Thomson Reuters data. Equity markets are climbing and investor uncertainty has subsided, at least for now, over the U.S. debt ceiling crisis and political gridlock.
     
    Shares of Container Store Group Inc doubled on their first day of trade on Nov. 1, joining strong debuts from more than half a dozen companies, including restaurant chains Noodles & Co and Potbelly Corp and software company Benefitfocus Inc.
     
    Twitter management has been traveling the United States over the past week, speaking with potential investors.
     
    Some investors and analysts have raised concerns about Twitter being overly reliant on advertising sales, with few other significant revenue sources in the near term. Twitter said last month that its third-quarter revenue more than doubled to $168.6 million, but net losses widened to $64.6 million from $21.6 million a year earlier.
     
    Twitter also disclosed in its new IPO filing on Monday that it had received a letter from International Business Machines Corp accusing the social media company of infringing on at least three U.S. patents.
     
    Although many tech companies wrangle over intellectual property claims, IBM is a more serious and deep-pocketed threat than any accuser Twitter has faced before. Twitter's thin patent portfolio has been long been a vulnerability, and the company will likely have to spend money to acquire patents, experts say.
     
    “Twitter has very little IP of their own,” said Maulin Shah of Envision IP, an advisory firm. “They seem to have been more focused on talent and product acquisitions, but I would not be surprised if they now go out and try to actively acquire companies that have larger IP portfolios.”
     
    Twitter said it had legitimate defense against IBM's accusations but warned that “there can be no assurance that we will be successful in defending against these allegations or reaching a business resolution that is satisfactory to us.”

    Facebook's experience
     
    Adam Grossman, an analyst at Boston investment firm Middleton & Co, with about $500 million under management, said his firm has yet to decide whether to buy into the IPO. The higher valuation “does make me more skeptical” he said.
     
    But Grossman noted that Twitter's bankers were conservative in not raising the size of the offering, which had caused problems for Facebook's IPO.
     
    Facebook raised its price range as well as the total number of shares in its IPO just before it debuted in May 2012. The move maximized the amount that Facebook's backers raised but contributed to declines in the stock in the early days of trade.
     
    Twitter in contrast has won plaudits for running a more modest IPO pitch process, including roadshow presentations that focused on business fundamentals.
     
    Goldman Sachs is leading Twitter's IPO, alongside Morgan Stanley and JPMorgan Chase & Co.

    You May Like

    Video Democrats Clinton, Kaine Offer 'Very Different Vision' Than Trump

    In a jab at Trump, Clinton says her team wants to 'build bridges, not walls'; Obama Hails Kaine's record; Trump calls Kaine a 'job-killer'

    Turkey Wants Pakistan to Close Down institutions, Businesses Linked to Gulen

    Thousands of Pakistani students are enrolled in Gulen's commercial network of around two dozen institutions operating in Pakistan for over two decades

    AU Passport A Work in Progress

    Who will get the passport and what the benefits are still need to be worked out

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movementi
    X
    July 22, 2016 11:49 AM
    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movement

    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video Scientists in Poland Race to Save Honeybees

    Honeybees are in danger worldwide. Causes of what's known as colony collapse disorder range from pesticides and loss of habitat to infections. But scientists in Poland say they are on track to finding a cure for one of the diseases. VOA’s George Putic reports.
    Video

    Video Wall Already Runs Along Parts of US-Mexico Border

    The Republican Party’s presidential nominee, Donald Trump, gained the support of many voters by saying he would build a wall to keep undocumented immigrants and drugs from coming across the border from Mexico. Critics have called his idea impractical and offensive to Mexico, while supporters say such a bold approach is needed to control the border. VOA’s Greg Flakus has more from the border town of Nogales, Arizona.
    Video

    Video New HIV Tests Emphasize Rapid Results

    As the global fight against AIDS intensifies, activists have placed increasing importance on getting people to know their HIV status. Some companies are developing new HIV testing methods designed to be quick, easy and accurate. Thuso Khumalo looks at the latest methods, presented at the International AIDS conference in Durban, South Africa.
    Video

    Video African Youth with HIV Urge More Support

    HIV, the virus that causes AIDS, is the top killer of teens in sub-Saharan Africa. But many youths say their experience with the virus is unique and needs to be addressed differently than the adult epidemic. VOA South African Correspondent Anita Powell reports.
    Video

    Video Poor Residents in Cleveland Not Feeling High Hopes of Republican Convention

    With the Republican Party's National Convention underway in Cleveland, Ohio, delegates and visitors are gathered in the host city's downtown - waiting to hear from the party's presidential candidate, Donald Trump. But a few kilometers from the convention's venue, Cleveland's poorest residents are not convinced Trump or his policies will make a difference in their lives. VOA's Ramon Taylor spoke with some of these residents as well as some of the Republican delegates and filed this report.
    Video

    Video Pop-Up Art Comes to Your Living Room, Backyard and Elsewhere

    Around the world, independent artists and musicians wrestle with a common problem: where to exhibit or perform? Traditional spaces such as museums and galleries are reserved for bigger names, and renting a space is not feasible for many. Enter ArtsUp, which connects artists with venue owners. Whether it’s a living room, restaurant, office or even a boat, pop-up events are bringing music and art to unexpected places. Tina Trinh has more.
    Video

    Video With Yosemite as Backdrop, Obama Praises National Parks

    Last month, President Barack Obama and his family visited some of the most beautiful national parks in the U.S. Using the majestic backdrop of a towering waterfall in California's Yosemite National Park, Obama praised the national park system which celebrates its 100th anniversary this year. He talked about the importance of America’s “national treasures” and the need to protect them from climate change and other threats. VOA’s Julie Taboh reports.
    Video

    Video Counter-Islamic State Coalition Plots Next Steps

    As momentum shifts against Islamic State in Iraq, discussions are taking place about the next steps for driving the terrorist group from its final strongholds. Secretary of State John Kerry is hosting a counter-IS meeting at the State Department, a day after defense ministers from more than 30 countries reviewed and agreed upon a course of action. VOA Pentagon correspondent Carla Babb reports.
    Video

    Video Russia's Participation at Brazil Olympic Games Still In Question

    The International Olympic Committee has delayed a decision on whether to ban all Russian teams from competing in next month's Olympic Games in Brazil over allegations of an elaborate doping scheme. The World Anti-Doping Agency recently released an independent report alleging widespread doping by Russian athletes at the 2014 Winter Olympics in Sochi. So far, only Russian track and field athletes have been barred from the Summer Games in Brazil. VOA's Zlatica Hoke has more.
    Video

    Video Scotland’s Booming Whisky Industry Fears Brexit Hangover

    After Britain’s vote to leave the European Union, Scotland’s government wants to break away from the United Kingdom – fearing the nation’s exports are at risk. Among the biggest of these is whisky. Henry Ridgwell reports on a time of turmoil for those involved in the ancient art of distilling Scotland’s most famous product.
    Video

    Video Millennials Could Determine Who Wins Race to White House

    With only four months to go until Americans elect a new president, one group of voters is getting a lot more attention these days: those ages 18 to 35, a generation known as millennials. It’s a demographic that some analysts say could have the power to decide the 2016 election. But a lot depends on whether they actually turn out to vote. VOA’s Alexa Lamanna reports.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.9079
    JPY
    USD
    106.10
    GBP
    USD
    0.7636
    CAD
    USD
    1.3106
    INR
    USD
    67.076

    Rates may not be current.