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Pinterest said to price IPO below last private valuation
[SAN FRANCISCO] Pinterest plans to set a price range for its initial public offering that will value it at below the US$12 billion that private investors last pegged the company at, according to a person with knowledge of the situation.
The digital pin board company is preparing to put out a filing Monday with the price range for its IPO, said the person, who declined to be identified because the details are confidential. Pinterest, which was valued at US$12 billion in 2017 by venture capitalists and other private investors, is part of a horde of high-profile but unprofitable tech startups that are now moving toward the public market.
A stock market valuation of less than US$12 billion for Pinterest raises questions about investor demand for these companies. Lyft, the ride-hailing company that is deeply unprofitable, went public last month amid a great deal of hype — until its shares promptly fell below its offering price on its second day of trading. The stock has since recovered.
How Lyft and Pinterest perform in their public debuts will be critical in the lead-up to the public offering of Uber, the largest of this generation of tech startups. Uber is expected to go public in the next few months at a valuation of about US$120 billion, in what would be the biggest offering by a US company.
Several other smaller companies are planning public offerings, including Zoom, a video conferencing company; PagerDuty, a software company; and Slack, an office communications company.
The Wall Street Journal earlier reported that Pinterest's public offering price range would put it at below US$12 billion.
Pinterest's filing on Monday will coincide with the beginning of the company's road show, during which it plans to pitch institutional investors before its final pricing and first day of trading. High demand from investors could lead the company to raise the price of its shares.
Private investors have poured US$1.5 billion into Pinterest. A market debut below US$12 billion would spell a loss for some of them.
Pinterest, which makes digital pin boards that allow people to save images and links from around the web, has traditionally been conservative in its spending and approach to growth. Its chief executive, Ben Silbermann, built Pinterest slowly and steadily. "Pinners," as users are known, use Pinterest today to create collage-like mood boards on topics such as food, events and hobbies.
Silbermann's approach has contrasted with those of other entrepreneurs who lead companies known as "unicorns," which are valued at more than US$1 billion by private investors. Such companies have typically prioritised fast growth over profits and take many years to go public. Unicorns that sell or go public below their last private valuation are known as "undercorns."
Like its peers, Pinterest loses money. But the company, which generates revenue from advertising, is burning less cash than Lyft or Uber. In March, Pinterest revealed it lost US$63 million on revenue of US$756 million in 2018. Pinterest is also growing quickly, reporting a 60 per cent jump in revenue between 2017 and 2018.
The company plans to list its shares on the New York Stock Exchange under the symbol PINS.