Twitter boosts price ahead of flotation today

SOCIAL media colossus Twitter priced its initial public offering (IPO) at $26 (£16.17) per share late last night, ready to float today on the New York Stock Exchange (NYSE).

The pricing is a dollar higher than the upper range of the previous attempt to value the company, and suggests a total valuation for Twitter of about $18bn.

Earlier this month Twitter announced that it was planning to sell 70m shares at $17 to $20 each, but lifted the price in response to buoyant demand. The price was then boosted to $23-25 per share, implying a market valuation of about $17.4bn, before yesterday’s hike.

Grey market trading on IG Index’s market during the middle of October suggested that the company could be valued at closer to $30bn.

Twitter’s revenue in the first nine months of the year rose to $422.2m, doubling from the same period in the previous year.

During the middle of September, Twitter filed confidentially to the Securities and Exchange Commission, which is allowed under US law for companies with revenue under $1bn (£622m).

A month later, Twitter announced that its flotation would go ahead on the NYSE, rebuffing the Nasdaq.

The online giant’s IPO has been compared to Facebook. Mark Zuckerberg’s social network fell in price after it was launched in May 2012, and stayed flat until this summer, before rising back above the original offer price in August.

Some analysts have voiced scepticism about Twitter as an investment because it has not yet made a profit, membership is free and the company relies on advertising revenues.

The price of a US-based electronics group, Tweeter Home Entertainment, soared last month after investors confused the firm with Twitter.

The flotation has been rumoured for years, with co-founder Biz Stone suggesting that the company could make a public offering as far back as 2009.

British investors, eyeing up a stake in the Twitter IPO today, will be forced to wait until shares are available on the open market this afternoon. Unlike the simple purchasing of Royal Mail shares last month, UK investors will need to jump through a few hoops to get hold of today’s red-hot stock.

What is the process for buying US shares?
UK investors will need to complete a tax form available from brokers – known as the IRS W-8BEN – before purchasing shares. Unfortunately it’s a process that could take up to two days. It’s also worth noting that dividends paid by American companies will be taxed in the US at 30 per cent, but this falls to 15 per cent if bought through a broker.

Who can I buy from?
Once the shares hit the open market, many brokers are lining up to offer their services. It’s worth noting that some brokers may only take telephone orders for Twitter shares during the IPO. Regular traders may prefer Hargreaves Lansdown’s Vantage platform, where they will pay £5.95 per trade plus a further 1.7 per cent to cover the exchange rate and transaction costs.

TD Direct offers a free trading account if you place at least one trade a quarter, with a dealing charge of £13.95 for active users or £10.95 for frequent users. Barclays Stockbrokers charges £12.95 for active users, but comes with a 1.5 per cent margin on the exchange rate.