Twitter Inc. has increased the price of shares for its initial public offering (IPO) by 25 percent, putting it on track to raise $1.75 billion.
A regulatory filing shows that the microblogging site is offering 70 million shares for $23 to $25 each, which will result in $13.6 billion market value. Previously the price range was $17 to $20.
"This number is still a reasonable and doable valuation, and I don't think it's going to turn people off," said Santosh Rao, an analyst at Greencrest Capital Management LLC. "We've seen this before, where companies start off with a low number to get people interested, and then work higher. The demand is there as this is the last of the big three social networks to go public."
Twitter has already managed to attract more than enough interest to sell all the shares in IPO before bankers start taking orders.
However, New York Times noted that the new price range can also act against the company. Quoting Facebook, it said that Twitter might make the same mistakes that hampered Facebook's IPO last year, when the rival social media company priced its shares too aggressively, a move that contributed to an initial fall in its share price.
Brian Wiese, who is a senior research analyst at Pivotal Research, recently set the target of $29 a share for Twitter based on its long-term revenue potential.
"If you've got a social strategy, Twitter is one of the most effective ways to activate that," he said to New York Times, before Twitter increased its price range. "What they've got is unique and not replicable in any sense."
Another analyst, Richard Greenfield who initially suggested its clients to buy Twitter at $17 to $20, updated his analysis.
"We would participate within the $23-$25 range, albeit, simple math would dictate that management should price at the bottom-end of the new range," he wrote to his clients.
"In our experience, very few people, whether tech savvy or not, truly know what to do with Twitter on an everyday basis," Greenfield noted. "But Twitter users who build out their interest graph are insanely addicted."
