In a recent S-1 filing, Twitter has set the initial terms of its upcoming IPO. The company plans to sell 70 million shares at $17 to $20 each. At the top end of the range, Twitter’s valuation is roughly $11 billion.
This may seem a bit underwhelming since many analysts were expecting the deal to come out at $15 billion to $20 billion, which is based on multiples from other social stocks like Facebook (FB) and LinkedIn (LNKD). Yet keep in mind that Twitter will likely increase the price range. And yes, there’s a good chance the stock will pop on its first day of trading. This has been the case with other recent tech deals like Veeva Systems (VEEV) and RetailMeNot (SALE).
It certainly helps that Twitter’s growth continues to surge, with sales doubling in Q3 to $168.6 million. In fact, about 70% of the sales come from mobile sources.
But there are still some issues. For example, Twitter posted a net loss of $64.6 million in the latest quarter, up from $21.6 million in the same period a year ago. The company also continues to experience a deceleration in user growth (for more on this, you can check out this post from the IPO Playbook.)
Such items will certainly be discussion points on the Twitter roadshow, which is expected to kick off early next week. The pricing is then scheduled for Nov. 6 (a Wednesday) and the stock will trade on the NYSE, under the ticker “TWTR,” on the following day.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.