Twitter sets IPO price at $26 per share, which means the company’s shares can begin trading on Thursday on the New York Stock Exchange.
The $26 IPO price values Twitter at $14.2 billion. The company intends to raise $1.8 billion by selling 70 million shares in the public offering.
With the price announced, all eyes will be on the New York Stock Exchange on Thursday morning to gauge investor reaction and demand for the stock, which will trade under the symbol TWTR. Although it’s not clear just how high the stock will go on its first day, it’s possible that shares will surge well above the offering price. So individual investors should be careful when looking to buy Twitter.
Still, $18 billion is a lofty valuation for Twitter compared with its peers. At its current price, Twitter valued at roughly 28 times its projected 2013 revenue —$650 million based on its current growth rate. In comparison, Facebook trades at about 16 times its projected 2013 revenue, according to analyst forecasts from FactSet. Google Inc. meanwhile, is trading at about 7 times its net revenue, the figure Wall Street follows that excludes ad commissions.
But Twitter isn’t yet profitable. The company pulled in $317 million in sales in 2012, but ended up reporting a loss of $79.4 million. For the first nine months of 2013, Twitter’s revenue came in at $422 million. But losses also increased, to $134 million.
Twitter lets users send short messages, or “tweets,” in 140-character bursts and has attracted world leaders, religious icons and celebrities, along with CEOs. It now has more than 230 million users, more than three-quarters of them outside the US.