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Pinterest sets conservative IPO pricing after Lyft drop

Published:Tuesday | April 9, 2019 | 12:15 AM
Evan Sharp, Pinterest co-founder and chief product officer.
Evan Sharp, Pinterest co-founder and chief product officer.

Pinterest, among the gaggle of tech companies hoping to go public this year, set a conservative price range Monday for its initial public offering (IPO). It hopes to raise as much as US$1.5 billion in its initial offering of shares.

The digital scrapbooking site, founded in 2010 by Ben Silbermann and Evan Sharp, said in a regulatory filing that it will put about 75 million shares up for sale at a price between US$15 and US$17 each.

That, at the higher end, could put the value of the company at around US$9 billion. But it falls below the estimated US$12-billion value from earlier sales of shares to private investors, according to reports two years ago.

Companies set their price range for an IPO with a tricky calculus set by investment banks and underwriters. They don’t want to set the bar too low, but going too high can lead to a sell-off.

And those tech companies still planning to go public this year may be treading more carefully following the debut of Lyft 12 days ago. After a much-ballyhooed debut, the stock slumped for two days. While its shares bounced back from their lows last week, they remain far below the heights reached in the flurry of first-day trading, and they fell 3 per cent Monday, again dipping under the initial offering price.

The Lyft drop was a “major gut check time for Lyft and the tech IPO world to see how this stock trades given it was the first one out of the box,” said Wedbush Securities analyst Dan Ives after Lyft shares tumbled.

Raising Share Price

Pinterest could raise the share price before it begins trading. Lyft, for example, set a range of US$62 to US$68 per share and opened trading at US$72 per share.

Other tech companies pushing to go public this year include Uber, Lyft’s rival, the messaging app Slack and the video-conferencing company Zoom are expected to make their debut soon.

Pinterest claims more than 250 million active monthly users and more than two billion monthly searches. It has long shunned the label of being a social network.

The platform allows people to search for and ‘pin’ images that interest them, whether it’s fashion, sports, pets or travel.

The San Francisco-based company had revenue of US$756 million last year, a 60 per cent bump from 2017. It had a loss of US$63 million in 2018, compared with a loss of US$130 million in 2017.