The time has come: Pinterest, the global visual discovery engine, is about to go public. The San Francisco-based startup is targeting a $9 billion dollar valuation when it lists its 75 million shares on the New York Stock Exchange this week.
So what makes PINS so attractive?
Quick facts about Pinterest’s business
Founded in 2010, Pinterest calls itself a “productivity tool for planning your dreams”. Today, it allows people all over the world to save inspiring images to virtual pinboards.
Emphasising the image-driven and visual nature of their service, Pinterest claims to provide people with the source of inspiration to create the life of their dreams. Operating internationally, Pinterest attracts over 250 million visitors on a monthly basis.
Here’s how Pinterest is growing:
The company took a low-key approach, stepping away from a traditional unicorn formula of moving fast and striving for growth at all costs. It was even called an 'anti-unicorn' as it shied away from the spotlight. Instead, Pinterest's founder, Ben Silbermann, favours the so called 'quality growth' strategy. He prefers to develop Pinterest steadily and slowly.
Pinterest has been steadily growing over the past 2 years. The company went beyond the United States and gained popularity around the world, targeting users worldwide.
According to the latest figures, Pinterest enjoyed 265 million active monthly users in 2018. A year before, in 2017, the company boasted 216 million.
Pinterest’s IPO plan
Pinterest is going public on the New York Stock Exchange (NYSE), listing its shares under the ticker symbol PINS. According to the recent estimates, the company may be valued anywhere between $9 and $11 billion. It is set to list 75 million shares at a price ranging from $15 to $17 per piece.
This estimation is below the $12 billion valuation, conducted by private market investors in 2015 and 2017. However, Pinterest could lift its price higher based on demand in early stages.
Pinterest has 12 underwriters for their offering, including giants like JP Morgan Chase, Goldman Sachs and Allen & Company.
Unlike other unicorns currently preparing for an IPO like Uber, Pinterest is not hemorrhaging cash at a devastating rate. While it is still unprofitable, its losses are substantially lower than that of its peers.
In 2018 the company reportedly lost $63 million, down from the $130 million it lost in the previous year. It put the company much closer to making a profit later on.
Besides, Pinterest is growing rather quickly. In 2018 the company’s estimated revenue, which came mostly from advertising, comprised $756 million, which is 60% higher than in 2017.
Dual-class share structure
Pinterest’s plan to keep control after going public involves a dual-class share structure. It means the company will have 2 share classes: class A shares, which cover 1 vote each, and class B shares, accumulating 20 votes each.
According to this structure, Pinterest’s founders, top managers and big investors will get class B shares, while all new investors will settle for class A shares.
Today, this dual practice is very popular in Silicon Valley: Google, Facebook, Snap and Lyft also adhere to a dual-class structure. However, it may be a controversial decision, since it can potentially lower the economic value of Pinterest’s low-voting A-class shares.
Pinterest’s value proposition
In the end, we may refer to the official Pinterest’s IPO prospectus, sharing the company’s vision of their own market opportunities and future growth.
It says: “On Pinterest, businesses of all sizes and from many industries can achieve a diverse set of goals, from building brand awareness, to increasing online traffic, to driving sales. Our platform isn’t limited to just advertisers with ’top-of-funnel’ goals or to those just seeking conversions. The natural progression of Pinners’ discovery journey — from inspiration, to planning, to action — takes them down the full purchasing funnel, and advertisers can provide value to them every step of the way. We believe new and improved products for Pinners and advertisers will drive future user and revenue growth for Pinterest.”
Now it’s time to weigh up all the pros and cons and make your own investment decision on whether to add PINS to your list of tradable assets.
Image source: Allmy / Shutterstock.com