Twitter Amps Up Share Price Ahead of IPO, Though Poll Shows Investor Skepticism

Twitter's confidence appears to be increasing ahead of its initial public offering set for later this week.

The 7-year-old short messaging service on Monday boosted the price range for the IPO, saying that it now expects to price its shares at between $23 and $25 each. It previously planned to sell the shares for between $17 and $20 each.

At its new range, the IPO could raise more than $2 billion.

The increase doesn't come as a big surprise. Many observers considered the previous pricing to be relatively conservative, given that Twitter is poised to pull off the year's hottest IPO. And some predicted that rather than set its expectations too high; the company would likely raise its pricing in the days leading up to the IPO.

Twitter said in its regulatory filing that it still plans to sell 70 million shares. If all of those shares are sold, the offering's underwriters can buy another 10.5 million shares.

Behind Twitter's IPO

At the $25 share price, Twitter's market value would be around $15.6 billion. Twitter's value is based on 625.2 million outstanding shares expected after the offering, including restricted stock units and stock options.

Some analysts had expected that figure to be as high as $20 billion. But Twitter's caution suggests that the company learned from Facebook's rocky IPO last year.

Facebook's IPO was marred by technical glitches on the Nasdaq Stock Exchange in May of 2012. As a result, the Securities and Exchange Commission fined Nasdaq $10 million, the largest ever levied against an exchange. Those problems likely led Twitter to the New York Stock Exchange.

The San Francisco-based company plans to list its stock under the ticker symbol "TWTR" on the NYSE. Twitter will begin trading on the NYSE on Thursday morning after setting a price for its IPO sometime Wednesday evening.

Twitter also said in its filing that it received a letter from IBM accusing it of infringing on three of its patents. The letter asks Twitter to take part in settlement negotiations, but Twitter said in its filing that it believes it has a "meritorious defense" to the allegations.

Meanwhile, the company faces skepticism from potential investors and the broader public, according to an Associated Press-CNBC poll.

According to the poll released Monday, Some 36 percent of Americans say buying Twitter shares would be a good investment, while 47 percent disagree. Last May, ahead of Facebook's IPO, 51 percent of Americans said Facebook Inc. would be a good investment. Just 31 percent didn't agree.

Twitter has not turned a profit since its launch, but its future depends on advertisements as a primary source of income. The company mainly sells three types of ads: promoted tweets, promoted accounts and promoted trends. A company like Starbucks, for instance, can pay Twitter to promote a single tweet or it can pay the company to ask users to follow its account.

And surprisingly, 52 percent of people ages 18 to 34 say investing in the company's stock is not a good idea.

Among the poll's other key findings:

  • One in 5 Americans say they have a Twitter account. One in 10, meanwhile, looks at Twitter feeds but doesn't have an account of their own.
  • Nearly a quarter of Twitter account holders send tweets at least once a day, while 29 percent say they never do. More account holders say they read others' tweets daily, 35 percent.
  • About 30 percent of Twitter users say they have used the service to register complaints about a product or service or when they are looking for information about services or products.
  • Twitter has billed itself as the place for public, real-time conversations, but only 16 percent of users say they turn to Twitter frequently for breaking news. That said, 44 percent of users do so at least some of the time.
  • Just 19 percent of respondents say they have a "favorable" view of Twitter, while 47 percent feel the same way about Facebook.
  • A sizable share of Americans aren't familiar with Twitter or don't know what to make of it: 9 percent have never heard of it and another 12 percent say they just don't know how they feel about it.
  • Just 35 percent of Americans say they think Twitter will be a successful company in five years. More, 49 percent, think Facebook will be successful in five years.

The Associated Press-CNBC telephone poll was conducted Oct. 25 to 27 by GfK Roper Public Affairs and Corporate Communications among 1,006 U.S. adults. The results have a margin of error of plus or minus 3 percentage points. According to Twitter, 77 percent of its 232 million monthly visitors are outside of the U.S.

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