Pinterest takes its time preparing for possible IPO

DALLAS • Pinterest is taking a mature approach to stock market listings. The scrapbooking site founded and run by Mr Ben Silbermann is one of the last social networks to tap the public markets for cash, but may do so through an initial public offering in mid-2019, CNBC reported recently.

It is probably worth US$13 billion (S$17.7 billion), a tad more than after a fund raising last year. The market is not as hot as it was, but Saudi Arabia's Prince Alwaleed bin Talal's US$250 million investment in Snap, unveiled on Tuesday, suggests investors are still interested in taking stakes in social media networks.

More time could make for a better debut for Pinterest. Unlike other social media platforms that engage in banter, Pinterest's clicks come primarily from new mums snooping around the Web for less controversial interaction. More than 60 per cent of its users have children under the age of five and are overwhelmingly women aged 25 to 54.

Almost three-quarters of them use the platform to find ideas that help with everyday life, like organising a closet or planning a work wardrobe. Pinterest may not have the excitement and adrenaline of Twitter and Facebook, or the youthful magnetism of Snap. But it is actually useful, which appeals to advertisers.

Users are already in the mood to shop and the site pushes them to do so. It is easy for advertisers to slip in their supplementary wares - a baking sheet for the person seeking a chocolate chip cookie recipe, for example - that fit a specific search. This year, Pinterest's revenue should approach US$1 billion, according to CNBC, roughly twice what the company made last year. But valuations have steadied since Pinterest raised US$150 million last year, which left the company worth just over US$12 billion.

Snap's enterprise value has since fallen to 14 times this year's estimated revenue, a drop of more than 40 per cent. Facebook's recent tumble leaves it at around 9.5 times revenue.

At a multiple closer to Snap, Pinterest is worth only slightly more than its valuation last year. It has grown its users by almost 15 per cent over the past year. That is faster than other mature platforms like Twitter, whose monthly active users grew around 3 per cent, it reported late last month.

But Pinterest does not have quite the same manipulative magic as Facebook when it comes to generating revenue out of those users. Its average monthly user brings in roughly US$5, where Mr Mark Zuckerberg's platform brings in about US$25, albeit with mounting concerns over its aggressive use of user data. The main task should be for Pinterest to increase that metric. Time is on its side.


A version of this article appeared in the print edition of The Straits Times on August 10, 2018, with the headline 'Pinterest takes its time preparing for possible IPO'. Print Edition | Subscribe