Twitter Prepares for IPO Launch

Currently Twitter’s chairman Jack Dorsey holds 4.9 percent of the company’s stock, with former CEO and co-founder Evan Williams holding 12 percent and current CEO Dick Costolo holding 1.6 percent. Cosolo and Chief Financial Officer Mike Gupta met with large fund managers on Monday and Tuesday of this week to promote Twitter’s IPO, with shares prices at $17 to $20 each and the company valued at around $11 billion. While this is far different from the $100 billion valuation of Facebook prior to its IPO launch, investors are reminded that Facebook had reported revenue of $3.7 billion and an annual profit of $1 billion before it went public, while Twitter reported revenue of $316.9 million and a net loss of $79.4 million in 2012.

Reports indicate that fund managers consider Twitter’s price range to be relatively conservative compared with analyst estimates of $28 to $30. Twitter’s internal valuation of its stock was $20.62 in September. This conservative valuation has enticed investors who are hopeful that Twitter’s shares will climb after the IPO launch through the NYSE on November 7. Facebook’s IPO price of $38 dropped to $25.52 on the first day of trade, before closing at $32.23, and it took the social media giant almost a year to regain its IPO price.

Twitter has chosen to launch its initial purchase offering through the New York Stock Exchange and had a test run on the weekend during which hundreds of thousands of orders were processed. The trial was declared successful. Twitter is expected to set its final IPO price on Wednesday, November 6, with shares trading for the first time on the NYSE on Thursday, November 7.