NEW YORK (TheStreet) - By setting the pricing of its initial public offering below some analysts' forecasts, Twitter may avoid the pandemonium that undermined Facebook's (FB - Get Report) blockbuster May 2012 listing.
Twitter said in a Thursday filing it will sell 70 million shares at an initial pricing range of between $17 and $20 a share.
The over 230 million user-strong micro-blogging site will attempt to offer up to $1.4 billion in stock and will also have the ability to sell an additional 10.5 million shares. Overall, the listing will value Twitter at $10.9 billion using the high end of the firm's range and a total of 544.7 million shares.
Twitter's initial pricing terms may be a comfort to those who worry the offering could suffer from problems with pricing and supply that plagued Facebook's $16 billion May 2012 IPO.
In that listing, Facebook and its bankers continually increased the price and supply of the company's stock to meet institutional and retail investor demand. In the end, Facebook sold a record amount of stock for a tech firm, in an offering that valued the social network at $100 billion.
Scott Sweet, a managing director at IPO Boutique, said in a Friday telephone interview he was relieved by Twitter's offering size and pricing. That may allow a better experience for retail investors seeking to get ahold of Twitter shares, after many ordinary investors were saddled with losses from Facebook's offering until a recent upswing in the firm's share price.
"I think retail will participate in Twitter's offering and demand will be extreme," Sweet said in reaction to initial pricing terms disclosed on Thursday. "There won't be the pandemonium that there was for the Facebook offering," Sweet said.
"I was very surprised and relieved to see $17-$20, as opposed to what the media had proposed of $28-$30 for the deal," he concluded.
Recent analyst and investor presentations indicate an expectation that Twitter will trade higher from whatever offering amount or pricing terms the company ultimately decides for its IPO. Those expectations would mirror a recent trend in IPO markets of technology-oriented listings.
"Since September, ten tech IPOs have come to market, accounting for 26% of YTD IPO volume. While this is a strong indicator of appetite, what is more telling is how the deals are pricing and trading," Ted Tobiason, a managing director in the equity capital markets division of Deutsche Bank (DB) said in a recent client note.
"These last ten tech deals are on average 66% above issue, with three more than 100% above offer. Aftermarket performance across all other sectors is 22% - not bad considering the market volatility of the past few weeks. But clearly, tech is an outlier," he added.
Recent IPOs outside of the technology sector have come in at the low-end of their pricing ranges, including four listings on Friday. One company, voxeljet (VJET - Get Report), priced its offering at the low-end of its range only to see its shares more than double on their first day of trading.
In voxeljet's recent listing, Sweet osaid underwriters may have mispriced the offering, given the firm's exposure to fast-growing 3D printing markets. "On voxeljet, they really gave it away," Sweet said.
As Twitter moves towards a listing and travels the country on a so-called road show with its underwriters, it is to be seen whether the company will try to get more money out of its offering, either on pricing or the offering size, if there is strong investor demand.
Twitter will list its shares on the New York Stock Exchange, a subsidiary of NYSE Euronext (NYX).
Goldman Sachs (GS - Get Report) will lead Twitter's IPO, while Morgan Stanley (MS), JPMorgan (JPM), Bank of America (BAC), Deutsche Bank, Allen & Company and CODE Advisors will also participate in the offering. The company will trade under ticker symbol 'TWTR.'
-- Written by Antoine Gara in New York.