Twitter debut raises heat in sharemarket
Wall Street is aflutter over Twitter, which is set to make the most anticipated sharemarket debut since Facebook in a huge test for social media and the technology sector.
No official date has been set, but Twitter appears on a fast track that could see its initial public offering priced as early as Wednesday for trading on Thursday.
The company will trade under the "TWTR" symbol on the New York Stock Exchange, breaking from the Nasdaq market used by a large number of tech companies.
There is considerable excitement about the IPO because Twitter is "a unique product that no one can replicate", head of equity research at Wedbush Securities Michael Pachter said.
Mr Pachter and his colleagues said in a research report they expected high demand: "We believe that the market is likely to generate appetite for more than $US1 billion ($1.06 billion) in stock. The simple rules of supply and demand suggest that by limiting the supply of shares offered to the public in its IPO, Twitter will be unable to satisfy demand."
Twitter appears to have learnt a lesson from Facebook's debacle in May 2012, marked by trading glitches, accusations about secret information and a plunge in the share value for months after its IPO.
"The Facebook situation last year was a perfect storm of an overheated private market, a fully priced offering, a massive amount of shares brought to market, all compounded by a historical technical glitch," Social Internet Fund founder Lou Kerner said. "That confluence of events is not likely to occur again."
As of its latest update, Twitter will seek to raise up to $US1.6 billion - one 10th the value of the Facebook IPO - by offering 70 million shares in a range of $US17 to $US20.
That is a small chunk of Twitter's capital, and implies a market value between $9.3 billion and $11.1 billion - a conservative figure compared with some of the private-market trades in Twitter.
Analysts say Twitter, unlike Facebook, will not flood the market, and that with demand exceeding supply, the price will rise.
The early Twitter investors may not get maximum value straight away, but could benefit over time from a rise in the share price.
Twitter does have a star quality likely to fuel interest, because it is a key platform for celebrities, politicians and journalists. In its investor presentation, the company used US President Barack Obama's widely retweeted message of "four more years" after his 2012 re-election, and noted how activist investor Carl Icahn's single tweet about buying Apple shares moved the sharemarket.
A crucial question for Twitter, as for Facebook, is how deftly the company is able to monetise its platform.
Twitter has 232 million active users around the world, but has lost money steadily since 2010, according to IPO documents. The losses amounted to $US133 million on US$422 million in revenues in the first nine months of the year.
Twitter makes most of its money from advertising, mainly "promoted tweets". A recent revamping of its display opened the door to bigger display-type ads.