Hoping to avoid a lackluster IPO like Facebook’s, Twitter is pricing its IPO
shares on the low end, at between U.S.$17-$20 a share, with the aim to bring in U.S.$1.4 billion to the business.
Twitter revealed its IPO plan in new regulatory filings that peg the value of the company at about U.S.$10.9 billion, far cheaper than both Facebook and LinkedIn. Facebook notoriously opened its IPO at a premium price of U.S.$38 a share only to see the price drop precipitously—and it didn’t rally to make up the difference until more than a year later. Twitter’s IPO is set to price on Nov. 6.
Yankee Group Research Director Sheryl Kingstone comments
“Twitter does not have as many active users out of the gate. However, let’s not forget that while its IPO may be cheaper than Facebook’s, Twitter still has great momentum with revenues more than doubled annually. While it hasn't yet turned a profit and the pace of user gains are slowing, Twitter’s popularity on mobile phones will eventually help attract advertisers. The future opportunity is all about mobile advertising, which is still in its infancy. Facebook took a year to recover, but it also hiccupped on its mobile story, a lesson Twitter is learning from.”