Twitter IPO Could Launch Nov. 7: Company May Be Sandbagging Shares
Twitter is launching an IPO and the rumor on the Street Is that the micro-blogging giant may be sandbagging the true value of the company. No doubt this is an attempt at avoiding a repeat of the performance of Facebook Inc. (NASDAQ:FB). The Facebook Inc. (NASDAQ:FB) IPO cost investors millions of dollars as the stock plummeted in value from its initial price of $38 per share. The stock dipped to less than $20 per share before finally making a slow comeback to its current price of $52.44.
Twitter is rumored to be pricing shares in the $17 to $20 range, which makes it an attractive buy for tech investors. This is below what most people believe the company to be truly valued at, and allows a sense of protection to investors. If the stock is priced correctly a repeat of the Facebook debacle will be avoided.
PrivCo CEO Likes Twitter’s Valuation
Sam Hamadeh of PrivCo has noted that he likes the valuation placed on Twitter at the current time. He said, “it’s actually far below a fair valuation.” He has noted that PrivCo does not believe the final price will be set quite so low, but added that it is “a very attractive price.”
He did weigh in on what he believes the company should be valued at, telling CNBC’s Fast Money that he believed a fair value for the shares would fall in the $30 to $33 price range. However, he noted that due to technical reasons and the current S1 SEC filing, Twitter most likely will not increase share price above the $20 to $23 range.
Hamadeh added that even at the $23 price Privco believes it is “a very attractive and conservative valuation, no question. We think there’s no question that Twitter is playing a scarcity playbook the way LinkedIn did a few years ago to great effect, and there’s no question that the ghost of the Facebook IPO debut is haunting Goldman, the lead underwriter, and Twitter management here in setting the price and the relatively small float.”
Tim Seymour Weighs In Against Hamadeh
Twitter is offering 70 million shares that could raise as much as $1.4 billion for the company. Tim Seymour of EmergingMoney.com has voiced his opinion of the scarcity issue and he disagrees with Hamadeh.
Seymour says that stakes in Twitter are already hard to come up with and he cites the illiquid market as a major reason for this. He also said “another problem I have with what Sam said is what bankers and what company are going to leave 80 percent of value on the table just so they can have a great IPO? I don’t buy it. So, if $33 is the fair value, there’s no way they would be coming between $17 and $20. No way!”
IPO Could Launch November 7th
Sentiment is generally positive toward Twitter and investors are ready to see the company go public. While Twitter has not officially announced a date for its IPO, CNBC claims a source has told them that shares should be priced on November 6th, which means the stock could begin trading on November 7th.
The stock will be listed on the New York Stock Exchange with “TWTR” as its ticker symbol.
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