The most anticipated IPO since Facebook is ready to go, with an offering price that values the company at $14.2 billion.
Twitter and its bankers set the price for its IPO at $26 per share this afternoon, with everything set for shares of TWTR to begin trading tomorrow on the New York Stock Exchange. It's the most anticipated -- and hyped? -- IPO since Facebook went public in May 2012.
And Twitter execs hope the comparisons to Facebook's IPO, which was met by eager sellers and technical glitches, ends there.
Twitter tweeted the share-price news this afternoon. It's offering the public 70 million shares, which would value the company at $14.2 billion. It's raising $1.82 billion in the offering. Twitter could later sell another 10.5 million shares if the demand is there.
Twitter on Monday said it planned on pricing its shares in the $23 to $25 range, which was considered conservative for what's gearing up to be a hot offering. Twitter execs and their bankers then went on the so-called "road show," where they try to drum up interest from professional money managers. Demand was hot, so the company boosted the price range by a dollar.
In its SEC filing earlier this week, Twitter used boilerplate language to explain what it expects to use the proceeds from the IPO for. It said the money will be used to "increase our capitalization and financial flexibility, create a public market for our common stock, and enable access to the public equity markets for us and our stockholders. We intend to use the net proceeds from this offering for general corporate purposes, including working capital, operating expenses, and capital expenditures."
Twitter, which is seven years old and has yet to make a dime, is eager to avoid the mistakes Facebook made with its IPO. For one, at the last minute Facebook boosted the number of shares available to the public, which diluted their value. Its stock tanked on going public, and it took more than a year to recover.
Tomorrow we'll see just how well the shares were priced. Though investors like a 1999-style first-day pop, that's not great for the company because it means it left money on the table. A little pop? Sure. That's often enough to pull in more retail investors.
So how important is this IPO? In sheer size, it's not that big. Its market value would make it roughly one-twelfth the size of Facebook. Yet investors and entrepreneurs around Silicon Valley are watching Twitter closely. A hot debut could ignite interest in other internet startups going public and boost venture investing, just as Facebook's botched IPO hurt others.
Update, 3:53 p.m. PT: Twitter has now confirmed the pricing.