Twilio prices higher in icebreaker public offer
Will first Silicon Valley tech IPO of the year open the gate for other startups to follow?
SAN FRANCISCO — Cloud communications startup Twilio priced its shares above the expected range Wednesday — a positive sign for analysts eagerly waiting to see if the company will reinvigorate the stagnant IPO market.
Twilio said it will start trading Thursday at $15 a share, above the $12-to$14 range the company had previously indicated. The deal, which will be the first Silicon Valley tech IPO of the year, is being closely watched as a bellwether to test whether the market will be receptive of future tech IPOs this year.
“There’s a lot of buzz around this offering, and I think it sends a great signal to the market,” Paul Boyd, managing partner of ClearPath Capital Partners, wrote in an email. “Let’s see if others follow suit and go out the gate.”
Boyd said he’s seen great demand for Twilio shares, and the IPO is oversubscribed.
At $15 a share, Twilio will be worth $1.23 billion. It was worth $1.03 billion as a private company, and its shares were valued at $11.31 during its most recent round of fundraising last year, according to data from venture capital database PitchBook.
Twilio, which provides communication technology to companies including Uber, is set to begin trading on the New York Stock Exchange under the ticker symbol TWLO.
Analysts hope the company’s debut will end the IPO drought in Silicon Valley, which hasn’t seen a tech offering since Square went public in November. But it all depends on how the market responds. Experts say a strong opening-day performance by Twilio could encourage additional area tech companies to take the plunge, while a weak showing could scare off other candidates.
“You definitely need to see the share price go up, probably at least 10 to 20 percent, if not more, and then it needs to hold there,” said Adley Bowden, PitchBook’s vice president of market development and analysis.
There are several factors weighing in Twilio’s favor, he said. The lack of tech IPOs this year has created a pent-up investment demand, which will be compounded by the relatively low volume of shares Twilio is offering — 10 million, with the option to add another 1.5 million. And existing Twilio shareholders already have expressed interest in buying 1.5 million more shares.
But investor confidence in Twilio doesn’t change the fact that the company is braving an uncertain market ahead of Britain’s vote Thursday on whether to leave the European Union, a move experts worry could send shock waves through the global economy.
“I still don’t think a successful Twilio IPO is going to open the flood gates by any means,” Taylor said Chris Taylor, executive vice president of global research, thought leadership and partnerships for analytics company Ipreo. “I think there’s more of a chance that if the offering does not go as well as they hope, it could chill the market for the immediate future.”