Twitter’s IPO documents suggest a valuation of $12.8 billion for the social media service, underscoring the seven-year rise of the still-unprofitable company that has revolutionized how people share information. That number is derived from the fair value that Twitter put on its shares in an initial public offering filing last week. Ironfire Capital LLC and Gamco Investors Inc. (GBL) project the company could be worth $15 billion to $20 billion once it begins trading, reports Bloomberg.
Those targets are fueled by the firms’ expectations that Twitter can increase revenue at a rapid clip, as it expands globally and draws advertising dollars from companies seeking access to its more than 200 million monthly active users. Twitter has more than doubled revenue annually as companies advertise on the service, the filing showed.
In the offering prospectus, Twitter pegged the fair value of its common stock at $20.62 a share as of August. There are 620 million shares outstanding, according to the story.
The stock may debut in a range of $28 to $30, and rise to $50 by the end of 2014, according to Robert Peck, a New York-based analyst at SunTrust Banks Inc. (STI) Peck expects new products to help revenue at Twitter reach about $1.2 billion next year, twice his estimate for 2013 sales, according to a research note.
At the $12.8 billion derived from the fair value price in its filing, Twitter would be valued at 28.6 times revenue of about $448 million over the past 12 months. Facebook trades at close to 20 times sales while LinkedIn gets about 21 times sales.