Twitter increased the price range for its initial public offering expected this week to $23-$25 per share, up from $17-$20, giving the social media company a value of up to $13.9 billion at the top end of the range.
Twitter is expected to go out with its IPO on Thursday, Nov. 7, offering 70 million shares on the New York Stock Exchange under the symbol “TWTR.” At $24 per share the company would raise $1.7 billion compared with $1.4 billion bsaed on the midpoint of the prior range.
Twitter disclosed the higher IPO price range in a filing Monday with the Securities and Exchange Commission.
In the updated filing, Twitter said it was recently contacted by IBM, which alleged that Twitter infringes on at least three U.S. patents held by the information-technology giant. IBM was seeking to negotiate a “business resolution of the allegations,” according to Twitter, while it also said it believed “we have meritorious defenses to IBM’s allegations.”
According to an Associated Press-CNBC poll released Monday, 40% of active investors said Twitter would be a good investment while 49% say it wouldn’t. (The phone surveyed polled 1,006 adults Oct. 25-27.) By contrast, an AP-CNBC poll in May 2012 found that 54% of active investors thought Facebook would be a good investment and 38% percent said that it would not.
The midpoint of Twitter’s new IPO range is nine times 2015 revenue and 5.9 times 2016 revenue as estimated by Wall Street analyst firm BTIG Research.
“We would participate within the $23-$25 (per share) range, albeit simple math would dictate that management should price at the bottom-end of the new range,” BTIG analyst Rich Greenfield wrote in a research note. The firm sees Twitter shares reaching $30 per over the next year, “particularly with our estimates well above management expectations.”
Twitter’s monthly active user based climbed to an average of 231.7 million for the quarter ended Sept. 30, up 6% from 218.3 million the previous quarter — making it less than a quarter of the size of rival Facebook. The company estimates less than 5% of those are bogus or spam accounts.
For the third quarter, Twitter reported $168.6 million in revenue and a net loss of $64.6 million, its highest reported to date.