Pinterest (NYSE:PINS), the social media platform renown for its image and gif hosting, is expected to go public soon during a tumultuous IPO that will value that company highly yet fall short of private valuation expectations made a few years ago. Pinterest’s founders and early investors are set to make a tidy profit from the market debut, giving current pricing expectations, yet some late investors in the company may struggle to turn a profit through its forthcoming public valuation.
Here’s everything we know about Pinterest and its forthcoming IPO, and how the social media platform is jockeying its way to the top of user’s attention spans.
Pinterest could be worth $12 billion
One of the primary reasons so many investors are interested in Pinterest isn’t that they’re social media addicts, but rather that the large company could be valued somewhere around $12 billion if things go according to plan. When Pinterest made some confidential filings, following in the footsteps of other major tech companies like Uber (NYSE:UBER), it was expecting to be worth somewhere around $12 billion after investors picked up their shares. This would put the company around its 2017 private valuation figure, which posited that it was worth $12.3 billion.
Recent developments in the market have given some investors reason to believe that Pinterest will struggle to break the $12 billion mark, however, with the company having revealed that it's going to be offering shares to the public at a price of $15-17 apiece. This could lead Pinterest to enjoy a hefty valuation of $11.3 billion, yet it’s unlikely to earn the company the $12 billion so desperately sought by private evaluators who once rated the social media platforms’ long-term prospects. That private valuation isn’t entirely worthless, however, as the clever company managed to drum up some $150 million in the capital thanks to the valuation.
Regardless of its access to money, investors may be disappointed that Pinterest likely won’t attain the lofty heights private evaluators once estimated it may be worth. Nevertheless, seasoned investors will be familiar with the fact that private valuations often fall far short of reality, and much has changed in 2017 in the social media scene that could disrupt any plans Pinterest and its backers once made. Before deciding if they want to financially back Pinterest, investors everywhere will likely want to take a dive into how the social media platform shapes up when compared to the competition.
Pinterest has a loyal user base
If there’s anything certain about Pinterest and its unique focus on uploading alluring photos and gifs, it’s that the company has developed a loyal user base over the years which responds positively to the changes it announces. Pinterest recently surpassed 250 million monthly active users, for instance, demonstrating that the social media platform has an extensive reach into the digital arena and is unlikely to fade from memory anytime soon. These users help the company drum up more cash through ad revenue, which can be insanely lucrative when it comes to social media platforms. Several social investing platforms have recommended this approach for social media companies.
Pinterest brought home $700 million in ad revenue, a whopping 50 percent increase from the prior year, demonstrating that the company is no small fish when it comes to attracting revenue streams. The company has also been enjoying plenty of positive press lately, largely because it was one of few social media platforms that actually moved quickly to stifle the transferring of false information or conspiracy theories on its website. While Facebook (NASDAQ:FB) and other social media companies were lambasted for failing to respond adequately to an outbreak of anti-vaccination conspiracy theories, for instance, Pinterest gained renown by restricting the ability of users to search for conspiracy content, earning the company some positive press in notable papers.
Goldman Sachs (NYSE:GS) and JPMorgan Chase (NYSE:JPM) are expected to underwrite the company’s market debut, with the former having originally purchased a sizable stack in Pinterest back when shares were $21.54 each. This means that the bank (alongside a handful of other wealthy investors who joined Pinterest late in the game) will likely lose money during the company’s forthcoming IPO. Early investors and the company’s core leaders will doubtlessly profit, however, as Pinterest’s large IPO is doubtlessly going to be one of the most eagerly watched in the wake of the government shutdown that’s frustrated so many market debuts.