Twitter shares will go for $26 each on its first day of trading at the New York Stock Exchange (NYSE) on Thursday. This number is slightly higher than initial range of $23 to $25 announced Monday and gives the social media company a value of over $18 billion. The company, which will go by the symbol TWTR, will sell 70 million shares and raise $1.82 billion, making its debut the biggest in the technology sector since May 2012 when Facebook went public.
The Twitter IPO will make its founders such as Evan Williams, one of the co-founders and biggest shareholder, worth more than a billion with a 10 percent stake in the company. Jack Dorsey, another founder of the firm, will be richer by more than $500 million holding a four percent stake. Twitter CEO Dick Costolo is expected to be richer by nearly $200 million. Twitter co-founder Biz Stone will reportedly also make a few millions though he sold his holdings in the past few years, but Noah Glass, also one of the originals, could benefit very little from Twitter's success.
Underwriters for the initial public offering of the social media company led by the Goldman Sachs Group will also rake in a good sum for managing the sale. The underwriters charged one of the lowest fee rates in a public offering in the United States this year but the fee pool to divide is said to be around $59.2 million. According to a report, JPMorgan Chase & Co. and Morgan Stanley will also get a slice of the pie.
"Investors see social media and mobile as sweet spots and it is therefore no surprise that Twitter's IPO is creating so much excitement and is oversubscribed. Twitter needs to step up and deliver on the expectations that are fuelling its valuation, and show that it has what it takes to provide a sustainable business model," said Eden Zoller, an analyst from consulting firm Ovum, in an interview.
Other analysts also forecasted a jump in prices of shares of Twitter after its listing.
"Just as Google, Amazon and Facebook have become Internet utilities, so too may Twitter. As a public, real-time, conversational and distributed platform, Twitter is becoming an essential service for consumers, businesses, media companies, and advertiser," said RBC Capital Markets analyst Mark Mahaney.
Twitter is hoping to perform better than its rival Facebook on its first day on the market. The latter's shares just closed 23 cents above its initial price of $38 on its first day on Nasdaq Stock Exchange. Facebook's shares traded below $38 for more than 12 months.
Twitter's valuation at $18 billion is about 28 times of its expected $650 million revenue for 2013.
The microblogging site has more than 230 million users.
