Twitter IPO target sets value at $14.2bn

Microblogging service Twitter is to make its New York Stock Exchange (NYSE) debut at $26 a share on 7 November 2013, valuing it at $14.2bn

Microblogging service Twitter is to make its New York Stock Exchange (NYSE) debut at $26 a share on 7 November 2013, valuing the company at $14.2bn.

After years of speculation, Twitter finally announced it had applied for an initial public offering (IPO) in September 2013.

In October, Twitter set a range of $17 to $20, valuing the firm at $11bn, but raised it to between $23 and $25, before finally settling on $26.

The rapid escalation follows strong demand from investors, but it is also likely to raise fears of a repeat of Facebook’s disastrous market debut in May 2012, according to the Telegraph.

Similar fears led the NYSE to conduct its first trial IPO to avoid the problems that beset Facebook’s IPO, with Twitter the biggest technology company to go public since then.

Facebook also revised its IPO target share price upwards a number of times, just ahead of its IPO. It managed to float at the top end of its range at $38.

Although the share price rose initially to $45, it subsequently fell to $19.82 before climbing back to floatation levels in August to trade above the listing price by October.

The crash in the share price shortly after IPO gave rise to a number of lawsuits against Facebook and its underwriters. Investors claimed they were misled about the value of the company.

The US Securities and Exchange Commission also fined the Nasdaq stock exchange $10m for a technical glitch that delayed the start of trading.

In addition to conducting a trial run, the NYSE is expected to delay trading in Twitter stock for 15 minutes after the opening bell to ensure a smooth start.

Twitter has seen a steady growth since its launch seven years ago, but has yet to show a profit and establish a solid business model.

The microblogging service made a loss of $69m in the first six months of 2013 despite revenues of $254m, mostly from advertising.

Twitter has not disclosed when it expects to become profitable, but analysts estimate that it will not do so until 2015.

Mobile ad growth is seen as key by investors and, while Twitter’s recent acquisition of mobile ad sales management firm MoPub is clearly aimed at strengthening its ad sales, the firm appears to be considering news as a source of revenue.

Twitter has established itself as a source for breaking news in recent months, and recently appointed Vivian Schiller, NBC News senior vice-president, as head of news.

Read more on Social media technology