Twitter IPO: a classic set-up
So what happens when a company goes public is the banks up the indicative "range" while the company is on the roadshow.
In Twitter's case, they upped the range to $20-25 -- which is actually a large range that tells me there is a lot of interest. On the last hour of the Roadshow, Twitter will have a "pricing call". That's when all of the investors put in their final orders and firm up pricing. Then an official price is affixed to the IPO, which is generally higher than the range.
Then, the shares take off on the first day of trading. The stock exhange will delay the opening so that the trading units and affiliated institutional sales can coordinate the buy and sell orders in an economically beneficial way -- generally they link a slew of sell orders together (they are "market" orders -- not limit orders so they can use them to "short" the heck out of the opening).
But what the question really is: will the new shares stay in the stratosphere?
Tesla didn't.
Trulia didn't.
Facebook didn't.
Zillow didn't.
Zynga didn't.
Jim Cramer's own IPO didn't.
A lot of IPOs just go up and come right back down. It's the way the trading units make a killing. It's just the way it works.
Few IPOs actually stay up on a sustained basis. Yanor's book explains everything.
LinkedIn was one of the few firms that was successful at keeping its share price up in the weeks and months that followed their IPO.