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Apr 22, 2019

What You Need to Know About Pinterest’s IPO

By Team Stash

Pinterest’s revenue continues to increase, but so do its losses.

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Social media company Pinterest, which popularized an online image pinup board as a way for consumers to communicate, went public April 18, 2019.

On its first day of trading, the company’s stock rose to $23.75, an increase of 25% from its stated opening price.

Here are some details of its IPO, according to paperwork it filed with the Securities and Exchange Commission (SEC), called a prospectus.

Pinterest’s IPO

  • Pinterest priced its stock at $19 a share, according to sources.
  • Pinterest raised about $1.6 billion from its offering, according to reports.
  • Following the company’s IPO, it achieved a $12 billion valuation.
  • Pinterest reports having $750 million in revenue in 2018, a 60% increase compared to 2017.
  • Pinterest loses money. It reported a loss of $62 million for 2018, compared to a loss of $130 million for 2017.

More about Pinterest

Pinterest, which was co-founded in 2010 by its current chief executive officer Ben Silberman, has approximately 265 million active monthly users. Its user base is approximately two thirds women.

It operates in a fiercely competitive social media industry, dominated by Facebook and Twitter, as well as Instagram, Youtube, and Snap, among others.

Given the visual nature of its product, it’s attractive to advertisers who can promote products with so-called click-to-buy adds, according to reports.

More about IPOs

Following an IPO, a new stock can be subject to significant increases or decreases in market price. That’s known as volatility. Stock volatility can be particularly high in the first few months following an IPO and as a result, so can the potential for short-term losses. If you’re in this stock for the long haul though, it could be an opportunity for dollar cost averaging.

Oftentimes, fluctuations in price are due to the expiration of something called a lockup period—this is when company insiders, such as employees, sign an agreement that prohibits them from selling shares for a specified period of time. (According to Pinterest’s prospectus, the company’s lockup period is 180 days.)

When lockup periods expire, insiders tend to sell their stock in order to realize a profit, sometimes causing the stock price to fall, or experience large changes in price in the process. You can find out more about the lockup period and other information about Pinterest by looking at its prospectus, a publicly available document on the Securities and Exchange Commission’s website EDGAR.

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Written by

Team Stash


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