TWTR – Twitter IPO Prices at $26 Per Share

TWTR will hit the markets at a nosebleed valuation

By Tom Taulli, InvestorPlace Writer & IPO Playbook Editor

The Twitter IPO has officially announced its pricing. The company will offer 70 million shares of TWTR stock to investors at $26 — a premium to its most recent range of $23 to $25. That range itself was a step up from its original range, which had the Twitter IPO pricing between $17 and $20.

Twitter stock TWTR Twitter IPOAt that pricing, TWTR expects to raise about $1.82 billion. That will make the Twitter IPO the biggest dot-com deal since Facebook (FB) went public.

However, overall, the Twitter IPO actually will be just the third-biggest offering of the year. Zoetis (ZTS) — the Pfizer (PFE) animal health spinoff that raised about $2.2 billion — was the second-largest of 2013. And raising the most was a lesser-ballyhooed offering, Plains GP Holdings (PAGP), the general partner of Plains All American Pipeline LP (PAA). Plains GP Holdings’ IPO brought in $2.82 billion.

The valuation of TWTR shares at this pricing is far from cheap. Assuming all warrants and options are exercised, the price-to-sales multiple for Twitter stock will come to a whopping 26. For comparison’s sake, Facebook trades at 18 times sales and LinkedIn (LNKD) trades at 19.

Founded in 2006, Twitter boasts over 230 million monthly active users and more than 100 million daily active users who help to generate roughly 500 million tweets every day.

The Twitter IPO is set to go live Thursday, Nov. 7.

More about TWTR and the Twitter IPO

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll 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.

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