Although they are offering only 70M shares, potential investors should be advised that there are 545M total O/S. The midpoint of this 17-20 price range will value the company at around $10B. Based on projected 2013 revenues of $650M, this translates to a revenue multiple in excess of 15. Using projected 2014 revenues of $1B, this revenue multiple drops to 10.
By way of comparison...
FB has projected 2013 revenues of $7.8B and a market cap of $126B, which translates to a revenue multiple of 16.
GOOG has projected 2013 revenues of $56B and a merket cap of $345B, which translates to a revenue multiple of 6.
So one can argue that GOOG is under-valued and TWTR has priced its IPO spot-on in targeting a revenue multiple of 15 at this time...
...or one can also look at it from the other side and say that FB is grossly over-valued and that TWTR has mis-priced itself and will similarly be over-valued with a revenue multiple of 15 at this time.
Me, personally? My belief is that GOOG's multiple is simply a reflection of its maturity as a company; its revenue model is well-known and is materially predictable now and into the foreseeable future.
FB's multiple is a reflection of expectations of significant growth, and that future annual revenues of at least $15B (compared to the current $7.8B) are being priced in already.
I view TWTR as being in a comparable situation as FB in that it is a growing company whose future revenues are just now beginning to be tapped, especially in the mobile space. Even with modest growth to $1B in revenues in 2014, the revenues multiple is a modest 10.
BUT, the caveat here is that this is assuming the market cap remains $10B -- which means the sp remains in the 17-20 range throughout 2014. And realistically, this won't happen (if it does, we've all F'd up).
By way of scale, here is what the revenues multiple for TWTR will be based upon the following sp levels for both 2013 revenues and projected 2014 revenues:
sp Level --- 2013 Multiple --- 2014 Multiple
$25 --- 21 --- 14
$30 --- 25 --- 16
$35 --- 29 --- 19
$40 --- 34 --- 22
$45 --- 38 --- 25
$50 --- 42 --- 27
I would recommend keeping these levels and related valuation multiples in mind as you assess your entry/exit points if you intend to either investor trade this IPO.
GLTA...
