Twitter plays it safe in IPO price range

NEW YORK – Twitter has set a price range of $17 to $20 per share for its initial public offering and says it could raise as much as $1.6 billion in the process. The pricing is relatively conservative considering that Twitter is poised to pull off the year’s hottest IPO.

Twitter Inc. said in a regulatory filing Thursday that it will put forth 70 million shares in the offering. If all the shares are sold, the underwriters can buy another 10.5 million shares.

At the $20 share price, Twitter’s market value would be around $12.5 billion, roughly one-tenth of Facebook’s current valuation. Twitter’s value is based on 625.2 million outstanding shares expected after the offering, including restricted stock units and stock options.

The San Francisco-based short-messaging service plans to list its stock under the ticker symbol “TWTR” on the New York Stock Exchange. The shares will likely start trading in early November. Twitter will begin its IPO “roadshow” as early as today, meeting with prospective investors to pitch its stock.

The company’s valuation is conservative. Some analysts had expected the figure to be as high as $20 billion. Back in August Twitter priced some of its employee stock options at $20.62, based on an appraisal by an investment firm.

Other publicly traded companies in the $12 billion range include tool maker Stanley Black & Decker and pharmaceutical company Forest Laboratories. LinkedIn Corp., meanwhile, stands around $27 billion based on its closing stock price Thursday.

Rather than set expectations too high, Twitter is playing it safe and will very likely raise its price range closer to the IPO, and thus fuel demand.