DCSIMG

Twitter plan to sell 70m shares in bid to raise $1bn

Twitter currently has 200 million active users, who send more than 500 million tweets a day. Picture: PA

Twitter currently has 200 million active users, who send more than 500 million tweets a day. Picture: PA

  • by ALEXEI ORESKOVIC AND GERRY SHIH
 

TWITTER has announced plans to sell 70 million shares in a bid to raise around $1 billion (£617 million).

The shares will be priced between $17 (£10.49) and $20 (£12.34), according to documents filed to the New York stock exchange yesterday.

The social networking site could offer 80,500,000 shares, just less than one-fifth of its outstanding shares before options.

It means the company, which trades under the name TWTR, values itself at as much as $10.9bn (£6.3bn).

Last month the microblogging site announced its intention to float in a tweet.

Twitter currently has 200 million active users, who send more than 500 million tweets a day.

Twitter filed paperwork for the initial public offering (IPO) last month, with experts valuing the site at between $10bn and $15bn, with most bets around the $11bn mark.

The IPO sparked constant discussion on Wall Street since Facebook floated in May last year for $104bn. But the company last month experienced an initial slump in shares amid concerns over how it could boost revenue from the growing number of mobile users.

Twitter, founded in 2006, has grown to become one of the largest and most powerful social media platforms in the world.

The San Francisco-based site is used by celebrities, journalists and millions around the globe to publish 140-character messages in real-time.

It has 200 million users worldwide – including 10 million in the UK – who post around 400 million tweets a day.

The company is believed to be on track to post $583m in revenues this year and $1bn next year.

Twitter’s offering will be the most high-profile internet IPO since Facebook’s May 2012 debut, when the social network giant’s shares fell below their offering price and did not recover until a year later.

However, the modest pricing does not obscure questions about Twitter’s profitability.

“The fact that the valuation is lower than expectations, I think was smart by the underwriters. I think it will help the pop,” said Michael Yoshikami of Destinational Weath Management.

“But in the end, even for $11bn, the question is can they come up with earnings to substantiate that number? And it’s unclear that they’re going to be able to do that.”

At a roughly $11bn valuation, Twitter would be worth more than Yelp Inc and AOL Inc combined, but only a fraction of tech giants like Google and Apple, worth $342bn and $483bn respectively. Facebook’s market value is now $128bn.

Twitter and its underwriters is expected to begin a two-week roadshow to woo investors next Monday in New York, with stops in Boston, Chicago, San Francisco, Los Angeles and Denver.

“They’re trying to price this for a very strong IPO, ideally creating the conditions for a solid after-market,” said Pivotal Research Group’s Brian Wieser, who valued Twitter at $19bn.

The company could choose to raise the price of the offering during that period as it gauges interest. It is expected to set a final price on 6 November suggesting trading will begin a day later.

 

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