Twitter’s current grey market mid-price of $23.75 billion would imply a share price of $43.60 at the end of day one, according to IG
Twitter is poised to make its debut on the New York Stock Exchange tomorrow, aiming to sell 70 million shares at between $23 and $25. If it reaches the top end of that range, Twitter will raise $1.75bn, and float with an initial market capitalisation of $13.6bn.
This is the largest Silicon Valley IPO since Facebook, and many people are sceptical about whether buying stock in the 7-year-old social media company will be a good investment, given Facebook’s less-than-impressive debut on the stock market in 2012.
To help potential investors get a feel for the market, financial services company IG has been running a grey market for Twitter since it filed its S-1, allowing clients to trade ahead of the official debut and giving an estimated value of the company ahead of its IPO.
IG’s current Twitter grey market mid-price of $23.75 billion would imply a share price of $43.60 at the end of day one, according to the company. This is down sharply from nearly three weeks ago, when the expected market cap hit $33 billion, equal to more than $60 a share.
“The good news is that extensive hype in advance of the Facebook IPO has been avoided. The decision to list on the NYSE was also clearly inspired by the disastrous delay in Facebook trading, due to a glitch in the NASDAQ computer,” said Brenda Kelly, Technical Analyst at IG.
“It must be remembered that Facebook was, and is, a much bigger company – it had 900 million users when it went public, and has more than a billion today – and its size was one of its big selling points. Also unlike Facebook, Twitter has yet to turn a profit. The company reported a net loss of $79.4 million on revenue of only $316.9 million in 2012.”
Kelly said that, given its active user base, the company does have great profit-making potential, but monetising this potential is a different story – something that early investors in Facebook learned the hard way !