Now we have a number.
On Thursday afternoon Twitter said it is planning to put 70 million shares on the market at between $17 and $20. Based on these prices, the company would be valued at around $11 billion, and would raise as much as $1.4 billion. But the valuation could go almost to $14 billion depending on how employees and investors exercise their stock options.
This is another reminder that although Twitter’s IPO is often held up as the most anticipated since Facebook, the company is much smaller. Its valuation is closer to Pinterest’s, which investors recently valued at $3.8 billion, than it is to Facebook’s, which went public last year with a valuation of $104 billion. As for what happens next, well, we’ve been here before. When Facebook went public, we laid out the whole process. The portion below picks it up from where Twitter is today. There are some minor differences—we know that Twitter will list on the New York Stock Exchange, for instance. But the basic process is the same.
Basically, Twitter’s executives will now have a bunch of meetings with investors, trying to convince them to buy and hold chunks of stock. Investors will grill it about its slowing growth and large annual losses, or enthuse about how people like to tweet while watching television. Based on what its hearing, Twitter could change the price during this process, known as the road show. The official pricing will happen the night before Twitter starts selling shares, reportedly around November 6.
Pricing an IPO is an inexact science, as Facebook discovered, and it’s only when the stock begins trading that we’ll learn precisely how the market values the company. At which point, we’ll probably need a new graphic.
