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Pinterest IPO Values The Firm At $12.7 Billion

Pinterest IPO Values The Firm At $12.7 Billion
Despite the bad performance of the stocks of US ride hailing company Lyft Inc after its much hyped IPO, the market apparently seems to be showing some confidence in the tech IPO market because of the more than expected valuation for online scrapbook firm Pinterest Inc’s initial public offering which valued the company $12.7 billion on Wednesday.
The mobile app of Pinterest allows its users to keep ideas for clothes, décor and recipes and started its trading at the New York Stock Exchange from Thursday. And after the launch of the ride-hailing start-up Lyft at the end of last month at the Nasdaq, the manner in which Pinterest’s shares perform would be a key indicator for the confidence of the market on tech IPOs.
At its IPO launch, Lyft had managed to raise more money than it had anticipated as its IPOs worked well but its shares fell by as much as 17 per cent compared to the price of shares at the launch of the IPO. This has raised concerns about the fate of the larger Lyft rival Uber’s performance at the stock market which is slated to launch its IPO sometime next month.
However, the difference in the valuation expectations is one of the differentiators between Pinterest and Lyft. While a market valuation of up to $24.3 billion was sought by Lyft during its launch of the IPO, it was much higher than the market valuation of $15 billion that the company had mange dot attain during its last round of private fund raising in 2018. The company had also notched a loss of $911 million last year. In comparison Pinterest lost only $63 million last year.
Pinterest was set to be valued lower than the private fundraising valuation of $12.3 billion which it had attained in 2017 because of its initial target price range of shares at $15-$17 per share. About $1.4 billion at a roughly $12.7 billion valuation was raised by Pinteerst at $19 per share. Advertisers are allowed to sell their products on Pinterest.
For those investors who had participated in prior fundraising rounds were apparently relieved by the fact that Pinterest managed to attained a higher valuation in the IPO. That also increased confidence on the company of investors as it went public starting Thursday.
And since Snap Inc in 2017, Pinterest is also the most high-profile listing of a U.S. social media company. In the case of Snap, while its shares were priced quite high during its IOPO launch, currently the value is 30 per cent lower than the IPO price.
Typically, expectation from investors with respect to IPOs from new companies is that they would perform better than the wider market. For example, so far this year, there has been a 30 per cent increase in the stock value of the Renaissance Capital’s IPO exchange traded fund.  

Christopher J. Mitchell

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