David Gelles and Peter Eavis, writing for the New York Times:
Twitter’s stock gained 73 percent in its first day of trading, adding more than $10 billion to the company’s market capitalization.
If the company had sold its 70 million shares at $45.10, the price of the first trade, instead of at $26, the price of the initial public offering, it would have raised $3.16 billion instead of its more modest $1.82 billion.
There are benefits to pricing an IPO below the expected true value – free publicity being a big one – but to underprice the Twitter IPO by more than 70% is an embarrassment. The company just sold about 10% of itself to new investors at a large discount. Perhaps Twitter and its bankers were trying to avoid a repeat of the Facebook’s IPO experience?