Pinterest announced that it will list on the New York Stock Exchange at between $15 and $17 a share, bringing the company’s potential valuation to $11.3 billion.
While this falls below the $12 billion price of its most recent private share sale, some analysts have commended the company’s cautious opening bid.
“There’s a good story underlying Pinterest so you could shoot for the maximum price, but the risks to the company are significant if you do that,” said Brian Wieser, president of business intelligence at GroupM and a former digital advertising analyst, according to The Financial Times,
“[They are] managing expectations. They can hopefully have a less volatile stock, and I think the risk that the stock eventually falls and employees leave them is reduced,” he added.
Founded in 2010, Pinterest has set itself apart from social media companies plagued with scandals involving fake news and data sharing. Instead, Pinterest is seen as a more wholesome online location that has tapped into a powerful advertising sector: the female economy, says Santosh Rao, head of research at Manhattan Venture Partners.
According to its prospectus, Pinterest has 82 million regular users in the U.S., with about 80 percent of American mothers active on the site — a group that often has more purchasing power than men.
“People come to the site for the high purchase intent,” Rao explained. “That’s great for advertisers. It’s very actionable — and these are people who spend money, it’s a very compelling demographic.”
Its regulatory filing also shows that Pinterest’s revenues, all of which come from advertising, grew about 60 percent to $756 million last year, while net losses more than halved to $63 million. Its main rival, Snap, lost $514.6 million the year before it went public.
“The positive surprise is how . . . Pinterest was much further along in terms of stopping burning cash and being a self-funded [business],” said Rohit Kulkarni, the senior vice-president of research at Forge.