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IPO price of $26 values Twitter at over $18b

NEW YORK — Twitter Inc. has set a price of $26 for its initial public offering of stock, which means the company’s shares can begin trading Thursday on the New York Stock Exchange.

The price values Twitter at more than $18 billion, based on its outstanding stock, options, and restricted stock that will be available after the IPO. That’s more than Macy’s, which has a market capitalization of $17 billion, and Bed Bath & Beyond, which is around $16 billion.

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The pricing means the short-message service will raise $1.8 billion in the IPO, before expenses.

Twitter, which has never turned a profit in its seven years of existence, had set a price range of $17 to $20 per share, but that was an obvious lowball range designed to temper expectations. It was widely expected the price range would go higher. In August, for example, the company priced some of its employee stock options at $20.62, based on an appraisal by an investment firm.

On Monday, Twitter raised the price range to $23 to $25, signaling an enthusiastic response from prospective investors. The San Francisco company is offering 70 million shares in the IPO, plus an option to buy another 10.5 million. It is set to begin trading Thursday under the symbol TWTR. Twitter’s public debut is the most highly anticipated IPO since Facebook’s, in May 2012.

But Twitter has valued itself at just a fraction of Facebook and has sought to cool expectations. It’s probably hoping its stock will avoid the fate of Facebook’s shares, which did not surpass their IPO price until more than a year after the offering.

Facebook’s debut was marred by technical glitches on the Nasdaq exchange. As a result, the Securities and Exchange Commission fined the Nasdaq $10 million, the largest ever levied against an exchange. Those problems probably led Twitter to the New York Stock Exchange.

On Wednesday, Barclays Capital said Twitter had hired it to be its ‘‘designated market maker,’’ a critical role when a stock starts trading. A DMM supervises the trading of a company’s stock. If technical problems arise, the NYSE uses DMMs to bypass electronic trading, allowing humans to trade a stock. That is not possible on all-electronic stock exchanges such as the Nasdaq.

Twitter got its start with Jack Dorsey and then Evan Williams as chief executives. Its current CEO is Dick Costolo, a former Google executive. On March 21, 2006, Dorsey posted the world’s first tweet: ‘‘Just setting up my twttr.’’ Noah Glass, who helped create Twitter, posted the same words 10 minutes later. Since then, the network has attracted world leaders, celebrities, CEOs, and self-promoters as users. It now has more than 230 million users, more than three-quarters of them abroad.

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