Twitter’s IPO: Feathering its nest
JUST a few days ahead of its planned initial public offering on the New York Stock Exchange, Twitter has raised the price range for its shares to $23 to $25, up from the original target of $17 to $20. The microblogging service and its bankers have hinted that strong demand for its stock justifies the increase. But the move, which could value the company at up to $13.6 billion, means that investors should be even more wary of taking a flutter on the firm’s stock.
At a valuation of $13.6 billion, Twitter would have a market capitalisation-to-trailing-12-month sales ratio of roughly 26, which is higher even than those of Facebook and LinkedIn when they went public. Yet Twitter has been coy about how exactly its advertising machine will be able to generate the billions of dollars of future revenues to justify such a lofty multiple. Rett Wallace of Triton Research, which analyses private companies, points out that Twitter has provided far less granular information about its sales activities in its regulatory filings than, say, LinkedIn did when it went public in 2011.Read full article at economist.com