Twitter IPO: 70 Million Shares, $17-20 Per Share, Raising $1.4 Billion At $11 Billion Valuation

Twitter IPO: 70 Million Shares, $17-20 Per Share, Raising $1.4 Billion At $11 Billion Valuation

Twitter has revealed a series of key details for its impending IPO, and, while interesting, the numbers are not quite as big as many analysts had been anticipating.

Twitter has announced that it plans to sell 70 million shares – around 13 percent of the company – priced between $17 and $20 per share, valuing the firm at $11.1 billion.

This will raise up to $1.4 billion for Twitter.

There’s been some speculation that Twitter has gone in on the lower end of their IPO forecast to avoid a repeat of Facebook’s IPO fiasco last year, which many blamed on an initial overpricing of the stock.

However, questions are still being raised as to whether Twitter can justify even an $11 billion valuation – the company, after all, is yet to turn a profit.

“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 Wealth 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.”

I agree on both counts. As I’ve said previously, I expect Twitter’s IPO to be almost the exact opposite of Facebook’s – a good first day followed by several months of slow decline while we wait for news of a healthier bottom line. Which could take another 6-12 months, so don’t expect to see much of an initial return on your Twitter shares if you’re fortunate enough to get onboard during the IPO. Hang on for the long term, however, and I think the stock is a winner.

(Also, Michael Arrington’s take on why Google should buy Twitter before the IPO is worth a read. I wouldn’t want to see Twitter sold to anyone but from Google’s perspective it makes absolute sense and Mike is spot-on as to why.)