Pinterest Gains 28 Percent Above IPO Price In First Day Of Trading
Social media firm Pinterest has managed to escape the same fate as Lyft and other startups during its stock market debut, despite prior speculations. The company opened its IPO pricing at US$19 per share, valuing it at around US$12.66 billion. After the trading day was concluded, the company's shares were trading at US$24.40 per share; a significant increase of 28 percent from its original IPO price.
Prior to its IPO, Pinterest's valuation was not nearly as high as Twitter or Snapchat's parent company Snap. However, despite their high private valuations, both company's struggled in the stock markets and have since fallen way below their original IPO prices. It has yet to be seen if Pinterest will follow suit or if it would be able to exceed expectations in the coming months.
Since the platform was conceived, its CEO Ben Silbermann has insisted that the company is not a social media network like Facebook or Twitter. The CEO previously explained that the platform is completely different in that its main focus is its users. Whatever the case may be, most investors are still treating the company as if it was just another social media firm.
According to analysts, traded social media firms are judged by three main categories. First is their ability to gain more users, second is their ability to make a profit from those users, and last is their overall process of becoming profitable.
In the first category, Pinterest previously revealed that it now has more than 250 million monthly active users. While it may sound enormous, it still pales in comparison to the numbers that Twitter and Facebook generate. Compared to other firms, Pinterest has proven itself to be profitable with reported revenues of US$750 million last year. The company has also managed to significantly shrink its losses in the past couple of years. By comparison, Snap had reported a US$515 million loss in the year prior to its IPO.
It has yet to be seen if Pinterest will be able to evade the dreaded curse that has so far hit the various tech startups that have gone public. Ride-hailing firm Lyft was the latest victim of the curse. The firm is now trading more than 20 percent below its original IPO price, at around 56.50 as of Wednesday this week. Both Twitter and Snap are currently trading well below their respective IPO prices as well. Fortunately, there may light at the end of the tunnel as indicated by the recent public performance of the video conferencing firm Zoom. Just a day into its IPO, Zoom had spiked by more than 70 percent from its original US$36 IPO price. However, it has to be noted that Zoom is quite different from its counterparts given that it is one of the few startups that have gone public actually making money.