The digital scrapbooking site Pinterest is preparing to go public and they’re seeking a valuation of $9 billion. This is lower than their valuation of nearly $12 billion when it raised its last round of funding two years ago.
The company set a price range of $15 to $17 per share for its initial public offering. Pinterest plans to sell more than 86 million shares which would raise up to $1.5 billion.
Pinterest’s announcement that they were seeking a lower valuation was met with some surprise but analysts say this could be a wise move. Rather than being a red flag, Forge CEO Kelly Rodriques says she sees it as “a pragmatic course correction.”
Analysts are cautiously optimistic about Pinterest
The lowered valuation was likely influenced by Lyft’s recent IPO. The company priced its public valuation higher than its private valuation and then couldn’t hold the initial price.
But Pinterest still has a lot of positive indicators. In 2018, the company reported $766 million in sales which is an increase of 60 percent from the previous year. It did post losses of $63 million but this is still a decrease from previous years. And it’s much lower than the losses reported by Lyft before it went public.
Pinterest has more than 250 million active users and their platform performs more than two billion searches each month. The company also reported that it has seen an increase in international monthly users in recent years.
Pinterest’s monthly users don’t come anywhere close to Facebook’s 2.3 billion users. But Pinterest tends to appeal to an older demographic, which is less likely to suddenly abandon the platform. And a good portion of Pinterest’s user base are moms, who tend to make most of the decision about buying household products.
And Pinterest has largely shied away from being labeled a social media site, which has helped them avoid the privacy issues Facebook continues to deal with. The company earns revenue when businesses promote pins in a user’s feed.
There are risks involved but there is still a lot to be hopeful about with Pinterest’s IPO. The company seems to have a fair amount of momentum on its side so it could see positive gains in 2019.
Pinterest is one of seven highly anticipated tech companies that is expected to go public this year. Slack, Uber, Airbnb, Instacart, Palantir, and Postmates are also expected to go public in 2019.