Editor's Note: This content was originally published on
by Tim Parker.
Not that anybody thought that selling shares of
) would be difficult but
is citing unnamed sources who say that demand is easily large
enough to sell all of its shares.
As of now, Twitter is planning to offer 70 million shares at $17 to
$20 each, according to regulatory filings. Shares will likely price
Wednesday with public trading starting the following day. CEO Dick
Costolo is touring the country, making stops in major US cities to
ignite interest in the stock. His road show is largely ceremonial
given the outsized interest in what will be the hottest IPO since
With all of the interest surrounding the IPO, analysts aren't
expecting the $17 to $20 range to hold. The price will likely rise
at least once, if not more before its final pricing on Wednesday.
Current pricing would raise about $1.4 billion implying a valuation
of about $10.9 billion. While popular, Twitter's IPO is a fraction
of the size of Facebook's, who raised $16 billion.
Critics believe that Twitter is playing it too safe. Current
valuations imply a multiple of 9.5 times 2014 sales compared to
Facebook's current 12.9 multiple. That puts Twitter at a 27
discount to its biggest rival. It's also priced at a 29% discount
) that trades at 13.4 times 2014 earnings.
Clearly, Twitter and its main underwriters,
) want to avoid the embarrassing fate of Facebook. Not only did
technical problems overshadow the IPO, it lost more than half of
its value within the first six months of trading.
(ZNGA) suffered the same fate not long after their IPO.
"It's fair to say they're learning from Facebook's mistakes," said
Michael Scanlon, managing director at Manulife Asset Management, to
But whether or not the company is playing it too safe is up for
debate. If the IPO closes its first day of trading up double or
even triple digits, investors will criticize the company for giving
up too much valuation. If it were priced too high and the stock
sinks, comparisons to Facebook could plague the stock long after
the IPO is yesterday's news.
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