Twitter seeks up to $1.61 billion in IPO

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Posted October 25, 2013

Twitter raised the value of its initial public offering Thursday to as much as $1.61 billion as the popular messaging service moved a step closer to Wall Street.

A Twitter tweet announcing the company's planned initial public offering (IPO) is pictured on a mobile telephone in Madrid on Oc
A Twitter tweet announcing the company’s planned initial public offering (IPO) is pictured on a mobile telephone in Madrid on October 4, 2013

The IPO suggests a market value for the social network of between $9.3 billion and $11.1 billion—a conservative amount compared to estimates by some analysts in recent weeks.

In a regulatory filing, Twitter boosted the IPO amount from an earlier estimate of $1 billion, saying it would sell 70 million shares in a price range between $17 and $20 a share.

Michael Pachter at Wedbush Securities said the pricing range is “well below the recent sales of private shares, which were at $27 to $28.”

He said this appears intended to avoid the mistake of Facebook in its 2012 IPO of flooding the market with shares.

“I think the company intends to create a lot of demand, and they are intentionally keeping the size small to make sure that demand exceeds supply. That should happen at this pricing,” Pachter told AFP in an email.

Lou Kerner, of the Social Internet Fund, said the market was likely to value the shares “markedly higher” than $17-20.

“So this initial range leaves the opportunity to up the eventual IPO price, which would comfort the market that there’s strong demand, and still leave room for a nice pop on the first day of trading,” he said.

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