Twitter boosts IPO price range to $23 to $25
Raised price range reflects optimism; Twitter expected to begin trading ThursdayBenjamin Pimentel
SAN FRANCISCO (MarketWatch) -- Twitter Inc. (Symbol : TWTR) raised the price range for its initial public offering a few days before its much-awaited trading debut, tapping into rising optimism as analysts have released bullish price targets for the stock.
Twitter set a new price range of $23 to $25 a share, according to a Monday filing with the Securities and Exchange Commission. Previously, Twitter set a price target of $17 to $20. Twitter is expected to set a final price on Wednesday and to begin trading on the New York Stock Exchange the following day.
The raised price range is still below the price targets set by some analysts who point to the social network's huge growth potential in the online ad market.
Morningstar analyst Rick Summer set a target of $26, arguing that Twitter "has only just begun to turn on its monetization engine for more than 230 million monthly active users."
Topeka Capital'sVictor Anthony is even more bullish, setting a price target of $54, telling clients in a note: "Twitter has less than 1% of a $1 trillion-plus addressable market. Opportunities exist to expand into search, commerce, more aggressively into video and even payments."
Analysts also speculate that Twitter is taking a more conservative approach to its IPO following the controversial debut of Facebook Inc. (Symbol : FB) in 2012. Read: Why Warren Buffett won't buy Twitter.
Facebook (Symbol : FB) set an IPO price of $38, which many analysts argued was too aggressive at that time. Facebook (Symbol : FB) shares traded below that price for months before rallying to record highs as the company posted strong quarterly results, highlighted by a steadily growing mobile-ad business. Facebook (Symbol : FB) shares were last trading at $48.63, up more than 80% year-to-date, and ahead nearly 30% from its IPO price.
Twitter also disclosed a brewing dispute with IBM Corp. over the social network's technology.
In its revised IPO filing, Twitter said the social network recently received a letter from International Business Machines Corp. (Symbol : IBM), "alleging that we infringe on at least three U.S. patents held by IBM (Symbol : IBM), and inviting us to negotiate a business resolution of the allegations." The dispute includes patents related to the "efficient retrieval of uniform resource locators," a "method for presenting advertising in an interactive service," and another for the "programmatic discovery of contacts."
Twitter said that based on its own review of the patents, "we believe we have meritorious defenses to IBM's (Symbol : IBM) allegations," but the company also added in the "risk factors" section of its IPO filing that "there can be no assurance that we will be successful in defending against these allegations or reaching a business resolution that is satisfactory to us."
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