A Pinterest IPO Makes More Sense Than Other Tech IPOs
Pinterest, a popular online service that allows users to pin (attach) pictures or videos—which web aficionados call “pins”—related to their interests (hence the name) could go public. Indeed, the cards are all there for a Pinterest initial public offering (IPO) in 2017, given that the company announced that it can count on over 150 million active users. This user number is 50% higher than a year ago, and an IPO would help fuel momentum. Pinterest, founded in 2010 in California, has an estimated value of $11.0 billion.
Of course, those same attractive numbers and user growth rates could also make Pinterest an attractive takeover candidate. Such companies include Facebook Inc (NASDAQ:FB), Alphabet Inc (NASDAQ:GOOG) (also known as Google), a media company like Walt Disney Co (NYSE:DIS), or a cloud computing specialist like Salesforce.com, Inc. (NYSE:CRM). Does this list of buyers sound familiar? Indeed, most of these companies recently had their purses out ready to splurge on Twitter Inc (NYSE:TWTR).
This suggests that a company like eBay Inc (NASDAQ:EBAY) or Amazon.com, Inc. (NASDAQ:AMZN) would also have something to gain from Pinterest. More than one million businesses and shops are found on Pinterest and thousands of advertisers rely on Pinterest. The question is: Pinterest takeover or Pinterest IPO? Indeed, Pinterest is that rare social media company that need not worry about how to generate advertising revenue.
Rather, advertisers worry about gaining presence on Pinterest. Its revenue numbers and potential are dizzying. Pinterest made $100.0 million in 2015 and this is expected to rise to $300.0 million for 2016. Suggestions of $1.0 billion are in order for 2017. (Source: “Pinterest hits 150M monthly users, missing earlier leaked projections in 2015,” Techcrunch, October 13, 2016.)
Pinterest Attracts More Investors than Other Social Media Does
This makes for an amazing pin, sure to attract interest from investors who are looking for another tech IPO “unicorn” (the last was Alibaba Group Holding Ltd (NYSE:BABA) in 2014) and companies wanting to expand their social media presence. Pinterest, more than the other potential unicorns—another is “Snapchat” (Snap Inc. )—is perhaps the one that makes the strongest revenue case.
There’s no need to speak in terms of “if” or “but” or “when.” Pinterest makes money, and advertisers don’t need persuading. They can see the point of Pinterest all by themselves.
The tech industry buzz has also focused on a Snapchat IPO. Companies crave user numbers. Pinterest has proven its popularity as well as any of the growing list of competitors, offering one form of the same service or another. Essentially, the goal of each of these players is to offer users the best platform through which to engage in social media. Each offers a slight variation based on a specialized activity. Pinterest focuses on pictures and videos; Twitter on brief statements with news links and so on.
Eventually, the day will come when a single buyer will gobble up all of these, combining all the activities under a single virtual roof. But, until then, some of these companies have gathered enough strength to warrant going public to launch their next growth spurt. That’s why a Pinterest IPO makes sense now.
The Bottom Line on Pinterest
Pinterest has not only gained huge popularity in the United States, it’s gaining users worldwide. International markets now represent more than half of its users (80 million). This is where the pillars of growth are. Indeed, Pinterest said that it now gets 75% of registrations outside the United States.
Pinterest’s appeal, coming from a non-user, seems to capture the social media “market” left lingering at the crossroads of social networks and online search engines. The company insists that it gets most of its visitors when they research products they are considering buying, making it a particularly interesting place to place ads. So, if you’re looking for the next big tech startup to be taken over or, better yet, to go public, keep watching Pinterest. A Pinterest IPO might be in the cards for 2017.