NEW YORK (TheStreet) - Analysts valuing the shares of Twitter say the popular micro-blogging site may be a bargain ahead of its upcoming initial public offering, which according to a recent filing, will list 70 million shares at a range of between $17 and $20 a share.
Twitter will sell up to $1.4 billion in stock in a share offering that would value the fast-growing media site at $10.9 billion using the high end of the firm's price range and a total of 544.7 million outstanding shares.
Recent analyst valuations on Twitter, however, peg the firm's shares closer to $30 apiece.
Sterne Agee analyst Arvind Bhatia said in a Monday client note that Twitter could be worth between $25 and $32 a share in the next 12 to 24 months, respectively.
In a bullish scenario where the firm's advertising and data licensing platform impresses its partners, Bhatia said Twitter could be worth as much as $48 a share. Were Twitter's execution to disappoint investors, as Facebook (FB) did in the wake of its blockbuster $16 billion May 2012 offering, Bhatia pegs the company's value as low as $13 a share.
Other disclosures such as slowing user growth and warnings about fake user accounts stand out as risks that will likely occupy investor minds in coming quarters. Some following Twitter's IPO process say the firm may avoid the pandemonium that undermined Facebook's listing, which suffered from technical glitches and problems a rich pricing and supply of the company's stock. 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. It is to be seen is whether Twitter's overall offering size or its price range changes, as the San Francisco-based company travels the U.S. on a road show for investors. 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. Twitter will list its shares on the New York Stock Exchange, a subsidiary of NYSE Euronext NYX. Goldman Sachs (GS) 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. Follow @antoinegara
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV