Shares will cost between £10-12 as Twitter aims to avoid repeat of Facebook floatation
Twitter has revealed plans to sell 70 million shares priced between $17 and $20 (£10-12) in order to raise £1.4 billion (£865m) in its Initial Public Offering (IPO), valuing the company at $11 billion (£6.8bn).
The microblogging site plans to trade under the name ‘TWTR’ on the New York Stock Exchange from 14 November, becoming the biggest company to go public since the troubled floatation of Facebook on the NASDAQ in May 2012.
It was previously thought that Twitter would offer shares costing between $28 and $30, giving the company a market value of between $15 and $16 billion (£9.2 – £9.9bn).
The suggestion is that Twitter has aimed low to avoid the problems that affected Facebook’s IPO, which saw shares valued at $38 apiece, giving the company a total value of $104 billion. But the value of Facebook shares slumped dramatically, although they have since reached record levels.
The hope is that Twitter can attract investors with a low share price, with some expecting stock to double almost immediately.
Twitter’s long-awaited IPO was confirmed in an S-1 filing with the US Security and Exchange Commission (SEC), a step undertaken by almost all companies planning to go public. It is a significant document that outlines financial results, business structure and the risks of investing in the company.
The document revealed the challenges Twitter faces in monetising its platform. The firm currently has 218.3 million active users and generated $253.6 million during the first half of 2013, but has yet to record a profit.
The majority of its income comes from advertising in the form of promoted Tweets and accounts, although it makes some money by licensing the use of its aggregated data to other companies.
Last week it was reported that Twitter was preparing to launch a standalone instant messaging application to prevent users from defecting to similar services like WhatsApp and BlackBerry Messenger.
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