Twitter’s IPO is looking to be a big one

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Twitter’s IPO (Initial Public Offering) is no secret but the company has been relatively mum about the expected prices for shares of the company when it goes public on the stock exchange. Last week the company revealed the price range for shares when it does make the jump to being publicly traded, pegging costs between $17 (R167) and $20 (R197) per share.

Based on these prices and the number of shares that Twitter will have available (70 million), the micro-blogging service is expected to raise some $1.4 billion for the company. Twitter has been valued at up to $11 billion so this isn’t a monstrous amount of cash for the company but Twitter is actually undervaluing their own shares for the IPO, according to the BBC.

The point is to avoid the scenario faced by Facebook with the social network’s own IPO, which saw an initial surge in the stock price from $38 to $45 before dropping dramatically. Twitter obviously hopes to avoid this and, even with the under-valuation, the company will still have the second-larger IPO for an internet company. Facebook, of course, is the leader.

There are some doubts as to whether Twitter will be able to effectively monetise their service on going public, something that they will have to do in order to satisfy investors. Currently Twitter makes most of its money from advertising but it has a lot of work to do in order to meet up with that $11 billion projected value.

Source: BBC

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