Twitter shares were set to soar in early trading Thursday as investors scramble to get a piece of what they hope will be the next blockbuster social media company after Facebook.
Twitter and its bankers, led by Goldman Sachs' Anthony Noto, priced its IPO at $26 a share late Wednesday. The offering raises more than $2 billion and values the business at $18.34 billion.
The shares were indicated to opened on the New York Stock Exchange, under ticker TWTR, at between $45 and $46. That would value the company at more than $30 billion, which compares to Facebook's market capitalization of $120 billion and LinkedIn's $26 billion value.
"There is nothing structural about our business that prevents us from achieving the kinds of margins that are in our peer group," Twitter CEO Dick Costolo said at the NYSE during an interview with CNBC.
Twitter founders Evan Williams, Jack Dorsey and Biz Stone were also present at the NYSE, however the company let Twitter users, including actor Patrick Stewart, ring the opening bell.
The Twitter IPO was heavily over-subscribed, which forced some investors to wait until the stock started trading Thursday to buy. That helped fuel big gains. A successful IPO is supposed to climb on its first day. So far this year, the average one-day pop for U.S. listed technology or Internet IPOs is 35%, according to Dealogic.
Twitter share gains were also driven by optimism about the company's long-term opportunities. The service is already a global media phenomenon, but it has a lot fewer users than Facebook and the company's business model - essentially the way it makes money - is still in its infancy.
That leaves room for investors to imagine great improvements from Twitter and buy its shares as they fly higher.
Mark Mahaney, a top-ranked Internet analyst at RBC Capital Markets, put a $33 price target on Twitter shares and argued that the company may become as indispensable as other giants of the web.
"Just as Google, Amazon and Facebook have become Internet Utilities, so too may Twitter," Mahaney wrote in a note to investors. "Twitter is becoming an essential service for consumers, businesses, media companies, and advertisers."
Twitter is also attractive because Facebook has already proved that lots of money can be made from social networks through advertising, Mahaney added.
And Twitter's service is naturally suited to mobile devices and the special advertising that goes with those smaller screens, the analyst added.
Mobile was a major trend that Facebook had not yet cracked when that company tripped and fell onto public markets in a troubled IPO last year. On Facebook's first day of trading, the shares ended up less than 1%, then slumped in the weeks that followed.
Only when Facebook started generating serious revenue from mobile ads earlier this year did its shares recover strongly.
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