It was just a matter of time before Twitter followed the lead of social networks Facebook (FB) and LinkedIn (LNKD) and made a grand and bold entrance into the public markets. Later this week, the microblogging network will do just that, and today bumped its price target higher signaling strong investor demand.
Twitter in an SEC filing earlier today said it has increased its initial public offering range to $23-$25, up from a previous price target of $17-$20. The company maintained its offering at 70 million shares, and if the overallotment option of 10.5 million shares is exercised, Twitter will raise up to $2 billion.
While many equity analysts forecast that Twitter will be valued near $11 billion, the new pricing cranks the company at up to $13.6 billion, 12.5 – 13.6 times the outlook for 2014 revenue of $1 billion, according to eMarketer. Both Facebook and LinkedIn trade around 12 times their forecast 2014 revenue.
Despite the hike, some analysts still see the price target as a low-ball, noting the company’s growth potential in the online ad market and 230 million users. As reported by MarketWatch, Topeka Capital analyst Victor Anthony sets a price target of $54 on the stock, in a note saying “Twitter has less than 1% of a $1 trillion-plus addressable market. Opportunities exist to expand into search, commerce, more aggressively into video and even payments.”
For comparison purposes, Facebook set its IPO at $38, raising more than $16 billion went it went public in May 2012 – the stock today trades at $48.57, below its record $54.83 set October 18, 2013, but up nearly 30 percent from its IPO price.
LinkedIn set its IPO at $45, soaring 109% to close its first day in the public markets at $94.25 – and just like that, the company was worth $8.9 billion, marking the biggest Internet IPO since Google in 2004. LinkedIn today trades at $223.97.
Twitter will set a final price Wednesday and is expected to commence trading Thursday.
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