Company will be valued at $14bn as share price rises from original estimates
Twitter will be valued at over $14bn (£8.7bn) when the social media company starts selling its shares on Thursday.
The company said it was pricing its Initial Public Offering (IPO) of 70 million shares of its common stock at $26 per share, raising $1.82bn in new money and valuing the company at $14.2bn.
The share price has risen as the company’s executives have been making their case to investors on their “road show”. Twitter originally estimated a share-price range of $17 to $20. On Monday that price was upped to between $23 and $25.
Twitter’s IPO will make billions for some of Silicon Valley’s top names including co-founders Ev Williams, who owns 59.6m shares and will add $1.47bn-plus to his net worth from the sale, and Jack Dorsey, who owns 23.4m shares. Twitter’s other backers include Amazon’s founder Jeff Bezos, and Marc Andreessen, Netscape’s founder turned serial investor.
The sale is the most hotly anticipated tech IPO since Facebook’s last May. But that sale proved a disaster with technical glitches marring the day followed by a share price crash. Twitter’s executives have privately worried about repeating one of the errors of Facebook’s IPO by setting too high a price could for the shares.
Facebook sold its shares at $38 – the top end of range it had set – and found that long-term investors were not keen to hold the stock after reports that the company was struggling to make money from mobile advertising. Shares slumped shortly after the IPO and it took a year for the shares to pass the price they were initially sold at. But pricing Twitter’s offer too low would stop the company raising as much money as it could have.
Before the pricing Tomas Freyman, director valuations at BDO, worried that history was about to repeat itself. “Despite Twitter’s price range valuing being more modest than some of the numbers bandied about over the last few weeks, this is still very high for a company that has yet to make any profits,” he said. “Value in Twitter is being largely driven by the hype surrounding the brand and the recent successes of other online businesses including Google, LinkedIn and Facebook, despite the latter’s early wobbles.
“Investors will inevitably make up their own minds on the appropriate valuation but we should all be mindful of the ‘real’ drivers of value, namely cashflow and profitability,” he said.
Other investors including Ironfire Capital and Gamco Investors had predicted the company could be valued at $15bn-$20bn. Jeffrey Sica, president of Sica Wealth Management, recently predicted Twitter could soar as high as $40bn but told Bloomberg the company would be “over-hyped” if the valuation rises above $30bn.
In a note to investors Brian Wieser, senior research analyst at Pivotal Research, set a buy price of $29 on the shares despite “limited growth of users in the United States and around the world.”
“Twitter’s scale is big enough AND (critically) unique enough to have sufficient scale to be a big business, if one that is unlikely to ever match Facebook’s ultimate size,” he wrote. “We can envision the stock moving past our price target quite rapidly, although how high is ‘up’ will be a function of the vagaries of demand in the market compounded by what we think will be positive operating momentum in the near-term.
“But we also expect that the stock will inevitably face some downward pressure at some point, whether because of sales due to lock-up expirations (which should occur in both February and May of next year), because of short-term missteps by the company (perceived or actual), competitive actions by competitors or because user trends fail to meet investor expectations,” wrote Weiser.
During Twitter’s road show investors have questioned the company’s ability to generate revenues and profits. Executives have also faced questions about its ability to continue to grow its user base and reign spending. The company has been highly acquisitive in the run up to the IPO and lost $143m over the past year on revenue of $534m, according to its most recent regulatory filing.
[Image via Agence France-Presse]
Two impeachment articles expected against President Trump: reports
Democrats are expected to announce on Tuesday two articles of impeachment against Donald Trump, US media reported Monday evening, after laying out their case at a hearing against a president they branded a "clear and present danger" to national security.
The articles will focus on abuse of power and obstruction of Congress, The Washington Post said, citing three official familiar with the matter.
It added that the full House of Representatives would vote on the articles next week, ahead of a trial in the Senate.
CNN said a third article on obstruction of justice was still being debated, and the network's sources cautioned that plans were still being finalized.
Ambassador McFaul ‘shocked’ Trump invited Sergey Lavrov back to the Oval Office: ‘What are they thinking?’
Former Ambassador to Russia Michael McFaul repeatedly said he was shocked that President Donald Trump will meet with Russian Foreign Minister Sergey Lavrov on Tuesday.
McFaul was interviewed Monday evening by Lawrence O'Donnell on MSNBC "The Last Word," where he contrasted how Trump is treating the Russian government of President Vladimir Putin to the Ukrainian government of President Volodymyr Zelensky.
"Ambassador McFaul, I want to get your reaction to the Russian foreign minister meeting tomorrow at the White House, in the Oval Office, with President Trump," O'Donnell said. "That's his second time. President Zelinsky still hasn't gotten that meeting and Donald trump apparently, apparently may be voted articles of impeachment in committee this week because of his interactions with President Zelensky."
House Judiciary to vote on Thursday to impeach Donald Trump: report
Democrats are moving ahead with the impeachment of President Donald Trump following another day of testimony on Monday.
"House Democrats plan to unveil at least two articles of impeachment Tuesday, charging President Donald Trump with abuse of power and obstruction of Congress, according to multiple lawmakers and aides. The Judiciary Committee plans to vote on the articles on Thursday, setting up a vote on the House floor next week to make Trump the third president in history to be impeached," Politico reported Monday evening.
"Democratic leaders plan to formally announce the articles at a press conference Tuesday morning. Judiciary Committee Democrats intend to meet ahead of the announcement and review the articles," Politico reported. "The decision to move forward with specific impeachment charges is the most significant move yet for the year-old Democratic House majority, a legacy-defining moment for Speaker Nancy Pelosi that sets up a Senate trial for Trump in early 2020."