Twitter Inc raised the top end of its IPO price range by 25 percent and will close its books a day early, signaling strong demand for the most closely watched Silicon Valley debut since Facebook Inc last year.
Amid a red-hot market for initial public offerings and soaring equity markets, Twitter raised its price range to $23 to $25 per share on Monday, but kept the offering size at 70 million shares. That means it will raise up to $2 billion if an overallotment option of 10.5 million shares is exercised.
Sources close to the situation said demand among institutional investors was so strong that the final pricing is likely to go even higher than the new range announced on Monday. The sources declined to be identified because the sales process is not public.
The microblogging network, which has yet to turn a profit, has amassed 230 million users in seven years, including heads of state, celebrities and activists. About half of all U.S. adult Twitter users said they get news through the social media platform, according to a Pew Research survey.
Twitter is the best known Silicon Valley company to go public since Facebook, though it is seeking a far smaller valuation of up to $13.6 billion compared to Facebook's $100 billion.
One of the sources said Twitter's IPO is now "massively" oversubscribed and underwriters are looking to select investors who plan to hold the stock for a longer duration rather than traders wanting to do a quick flip.
Some funds that ordinarily do not buy IPO shares were seeking allocations of up to 10 percent, but were unlikely to get them, according to the source who requested anonymity.
Twitter plans to close the books on the IPO on Tuesday at 12 p.m. EST (1700 GMT), a day earlier than scheduled, because of strong demand, according to two sources with knowledge of the process.
The IPO is set to price on Wednesday, with shares to begin trading on the New York Stock Exchange on Thursday. The previous price range was $17 to $20 a share.
The new pricing would value the company at up to $13.6 billion, or about 12.5 to 13.6 times forecast 2014 revenue of $1 billion, according to eMarketer. Both Facebook and LinkedIn Corp trade at about 12 times forecast 2014 revenue.
Several equity research analysts said they expect Twitter shares to rise after they begin trading, with some setting their one-year price target as high as $52.
"We would participate within the $23-$25 range, albeit, simple math would dictate that management should price at the bottom end of the new range," BTIG's Richard Greenfield said in a note Monday after the price was raised.
RED-HOT MARKET
Year to date, 2013 has been the strongest for IPOs since 2007 in the United States, with more than 178 companies going public, according to Thomson Reuters data. Equity markets are climbing and investor uncertainty has subsided, at least for now, over the U.S. debt ceiling crisis and political gridlock.
Shares of Container Store Group Inc doubled on their first day of trade on November 1, joining strong debuts from more than half a dozen companies, including restaurant chains Noodles & Co and Potbelly Corp and software company Benefitfocus Inc.
Twitter management has been traveling the United States over the past week, speaking with potential investors.
On Monday, they pitched about 120 investors over lunch at the San Francisco Ritz Carlton but did not encounter any questions about the newly proposed IPO price range.
Instead, investors focused on Twitter's fundamental business and asked about its plans to make money outside the United States and its headcount projections, which have contributed to the company's ballooning costs, according to several people who were present.
Twitter executives were scheduled to hold one-on-one meetings with investors Monday afternoon before traveling to Los Angeles for meetings on Tuesday.
Source : Reuters
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