Twitter set the price of its initial public offering at $26 a share on Wednesday -- above the expected range of $23 to $25. Twitter shares are set to begin trading Thursday on the New York Stock Exchange.
The IPO values Twitter at $14.1 billion, with the potential to reach $14.4 billion if underwriters exercise an over-allotment option, as they are widely expected to, according to Reuters.
With 70 million shares sold in the offering, Twitter raised $1.8 billion, the New York Times reports. The IPO's price was higher than an already heightened price range, which reflects the healthy demand for Twitter stock.
According to Thomson Reuters data, if the full overallotment is exercised, Twitter could raise $2.1 billion, making it the second-largest Internet offering in the U.S. after Facebook's $16 billion IPO in 2012 and ahead of Google Inc.'s IPO in 2004.
Some analysts expect shares of Twitter to experience a small "pop" during the first day of trading. Twelve-month price targets on the stock range from $29 to $54, Reuters noted.
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It isn't likely that the company will see shares soar initially, but a less formidable pop could indeed occur, David Menlow, president of research firm IPO Financial, pointed out. "I think you could see shares rise 10 percent but there are still a lot of naysayers out there who think the stock is overvalued," Menlow added.
The IPO is a significant sign of maturity for the company, which has fine-tuned a key social forum used by celebrities, world leaders, dissidents, corporate giants, tiny businesses, not to mention, of course, just about anyone else who wants to take part in, or just listen to, whatever discussion is hot at the moment.
Still, investors have reason to be cautious as the company that created the micro-blogging sensation becomes publicly traded. An important reason: Twitter is having a tough time retaining users and attracting new ones, the New York Times pointed out.
And with tweets getting posted chronologically, no matter how important, or unimportant, they are, Twitter's format can lead to crucial information getting lost in an ocean of conversation.
“You see the stream of posts coming at you, and it’s really overwhelming,” Debra Aho Williamson, an analyst who studies Twitter and other social media for eMarketer, says. “It’s all jumbled.”
Twitter's IPO comes amid the strongest market for U.S. IPOs since 2007, as equity markets soared and uncertainty around the U.S. debt ceiling has largely subsided for now.