Twitter gives itself cautious $10.5bn price tag - Financial Times

Twitter is trying to keep a lid on its valuation ahead of its much-anticipated initial public offering, pricing itself at $10.5bn in a transaction this week. The internet company wants to restrain the kind of runaway enthusiasm that created IPO problems for Facebook and Groupon, putting a conservative estimate on its worth when it made its largest ever acquisition on Monday. The 140-character messaging site issued stock to buy MoPub, a fast-growing mobile advertising exchange, at $20 per share, said a person familiar with the company, valuing Twitter at about $10.5bn and MoPub at just over $300m. Twitter has allowed its own assessment of a fair market value for the company to increase about 15 per cent since the start of the year, when BlackRock, the world's largest asset manager, bought a stake in a transaction that valued it at roughly $9bn. That rise is significantly less than the soaring transactions in Twitter's illiquid private market, over which the company does not have control. Private buyers were offering up to $28 this week, according to two existing shareholders on Thursday, which would value the company at about $15bn. The company froze the private market in its shares on September 12 when it publicised the fact it had filed for an IPO. Facebook made a similar move a month before it floated, while Groupon and Zynga did not halt secondary trades at all. After seeing Facebook's valuation balloon in private market trading before its IPO, Twitter tried to limit the price of trades that it has facilitated, in the hope of retaining upside for investors who buy in when it goes public later this year. Twitter frowned upon employees conducting transactions with people who are not authorised buyers, who tend to be existing shareholders. Some private trades valued Facebook at more than the $100bn at which it initially priced its public debut, before its market capitalisation halved within two months of listing. Twitter has more than 200m users compared with Facebook's 1bn. Adriana Lozada, an analyst at private company research firm Privco, said she expected a valuation of at least $15bn for the offering. "Twitter has had three-digit growth in the past few years but beyond the fundamentals it also has the promise of an IPO," she said. "It has a great story." Users, schmusers. It's all about sales, getting feet on the street and collecting cheques - Brian Wieser, Pivotal Research analyst The company's efforts to boost revenue from partnerships with media companies to its MoPub acquisition, have paid off and lured in investors, Ms Lozada said. Twitter's revenues have more than doubled since 2011 but questions have been raised over its rate of user growth. GlobalWebIndex, a study of internet usage, has estimated that Twitter now has about 300m active users, from a total of 600m registered accounts. Reports have suggested Twitter's internal tally stands at closer to 240m. Fewer than half of Twitter's regular monthly visitors post tweets, GlobalWebIndex found, with most just following others. This silent majority is more likely than active tweeters to switch to a rival service but is nonetheless valuable to advertisers, prompting design changes at Twitter to improve retention. Though the number of Twitter users is not clear, and possibly growing at a slower clip than will impress most Silicon Valley experts, that metric is "irrelevant", said Brian Wieser, an analyst with Pivotal Research. "Users, schmusers," he said. "It's all about sales, getting feet on the street and collecting cheques. Twitter does not have as much reach or tonnage of usage as Facebook. They do have differentiated offering and . . . are clearly big enough to matter." Additional reporting by April Dembosky Copyright The Financial Times Limited 2013. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web. via Technology - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNG1a31AtG10yqu3p_nOFK4NdJwJJQ&url=http://www.ft.com/cms/s/0/727e2cb0-1cb8-11e3-a8a3-00144feab7de.html

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