Twitter, Inc. (TWTR) is close to pricing its share for its IPO next month and is expected to announce firm numbers by November 6, possibly in the next few days. Once it has a solid price it will be able to start its IPO roadshow, pitching the deal to big investors, reports Daniel Terdiman for CNET. This is easily the most anticipated IPO of the season and one of the most anticipated in the last few years.
Twitter’s stock pricing
Twitter, Inc. (TWTR) is seeking around $1 billion from the IPO, but it has to be careful not to price the stock too high or it could end up falling far short as some people are concerned that the company is already being over-hyped. Investors who have been plugging the company also had a shock when the company released an S-1 showing that mobile ad company MoPub will only bring in around $12 million in revenues this year, even though Twitter gave the company stocks worth around $350 million.
On the other hand, Twitter, Inc. (TWTR)’s ad revenue grew 123% year on year. Since this is expected to be Twitter’s biggest source of revenue for years to come, such strong growth is extremely encouraging. Twitter also has an advantage over social media rival Facebook Inc (NASDAQ:FB) in that its service translates naturally to smartphones and tablets, while Facebook is still struggling to make its mobile app as popular as its website. Twitter reported in its third quarter filing that 76% of users who access this site at least once a month use the mobile app.
Twitter credit line
Twitter, Inc. (TWTR) also seems to be hedging its bets with a $1 billion credit line available for the next five years that it recently opened. Twitter hasn’t actually drawn any money from the fund yet, but since most analysts think the company is trying to raise the same amount from the IPO, it looks like this unsecured line of credit is meant to ensure that strategic plans can continue without a hitch even if the IPO disappoints. This should give some assurance to big investors that they won’t be left high and dry either way.