Twitter shares, priced at $26 dollars each, means the company is worth $18 billion.
Its market debut today, November 7th, 2014, on the New York Stock Exchange (NYSE) is one of the biggest debuts for a tech firm since May last year when Facebook went public – and was valued at $104 billion.
Many investors have valued Twitter shares at nearly $30 dollars. Most say they that with apparent strong institutional investor support, the day may well close at more than $30 per share on its first day.
The company will raise over $1.82 billion by selling 70 million Twitter shares under the symbol “TWTR”.
If demand is high enough there will be the option for people to buy a further 10.5 million shares. The IPO will raise $2.09 billion if all shares are sold.
Twitter decided to trade its shares on the New York Stock Exchange as opposed to Nasdaq, which has traditionally been the market of choice for tech companies.
However, there have been delays and glitches associated with Nasdaq.
Unlike Facebook, Twitter has chosen to trade its shares on the New York Stock Exchange.
Despite having over 230 million users the Twitter is not making a profit yet – and has never turned a profit in its 7 years of existence. In fact, its third quarter losses this year reached $64.6m (up from $21.6m in Q3 2012).
In addition, a recent poll conducted by Reuters revealed that more than 33 percent of registered Twitter users don’t even use the service.
The company was able to raise the offering price twice, and demand for the shares was very strong.
A sketch of an SMS based social network by Jack Dorsey in 2006. Who would have thought it’d end up being worth billions?
One analyst, Eden Zoller of consulting firm Ovum, said:
“Investors see social media and mobile as sweet spots and it is therefore no surprise that Twitter’s IPO is creating so much excitement and is oversubscribed.”
She added:
“Twitter needs to step up and deliver on the expectations that are fueling its valuation, and show that it has what it takes to provide a sustainable business model.”