Micro-blogging site Twitter (TWTR) has priced its IPO at $26 per share just hours before one of the most highly anticipated initial public offering of the year.
Now that Twitter has priced its IPO, investment banks, or underwriters, will immediately sell the IPO shares to clients, typically institutional investors, based on its earlier orders.
Individual investors will get their first shot at buying shares of Twitter on Thursday, whenever the stock begins to trade sometime after the New York Stock Exchange opens at 9:30 a.m. EST. The exact timing is unclear.
On Monday, the company provided an IPO price range of between $23 and $25 a share, an increase from the previous projection of $17 and $20.
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Rick Summer, senior analyst with Morningstar, gave Twitter a fair value of $26 with a "bear-case" valuation of $15 and "bull" valuation of $50.
"Our enthusiasm for the IPO has been wholly dependent on the pricing of the offering," he said in an email.
Summer said that if the stock begins trading in the $30 range, he believes the stock would be "modestly overvalued, and investors are taking an inappropriate amount of risk at those levels."
"The IPO price and aftermarket are a reflection of supply and demand," he said. "Eventually we expect the market price to reflect its intrinsic value, but in the short-term, all bets are off."
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Twitter has never made any money. Twitter had sales of $254 million in the six months ended June 30, up from $122 million it generated in the first half of 2012. But the social messaging service's net loss widened to $69 million in the first half of this year, from a net loss of $48 million in the same period a year earlier.
"With a growing ecosystem of content partners, media, celebrities, and engaged users, we expect the company to expand its user base and its monetization capabilities through new ad products," Summers wrote in a research note on Oct. 31.
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