2017 could be the year that investors finally get to buy Pinterest stock. In early October 2016, Pinterest hired its first CFO (Todd Morgenfeld) and industry insiders are speculating that the move is the companies first step toward an eventual IPO. However, as of late 2016, there is still no official word from Pinterest on any plans to offer stock to though a public offering so investors will have to continue to wait.
Pinterest is reported to be valued at $11 billion which puts it just outside the top 10 most valuable private companies in the world. Its user base is 150 million and it is now attracting more men than it did in the early years when the site was dominated by women. 2015 revenue was $100 million and investors will be extremely interested in Pinterest’s growth rate and ability to attract advertisers before buying the stock on its opening IPO day.
Will Pinterest Stock Be A Good Investment?
Pinterest is different than most social media sites because it is NOT a communications platform. It doesn’t compete with Facebook, Snapchat, or Twitter but it does compete with Etsy and to a lesser extent Instagram. Pinterest users delight in looking through the more than 75 billion pictures and often use the site to get ideas about pretty much everything in life.
With so many pictures of products and ways to use products, one would think that Pinterest might be a gold mine for companies looking for ways to target their advertising budgets. Clearly the potential is there but if the stock is anything like Etsy, then investors should be careful. Etsy had its IPO in April 2015 and its stock price a year and a half later is down about 50%. Etsy and Pinterest are definitely not the same business models but they both focus a lot on products and Pinterest will have to do a better job of monetizing if it hopes to have a successful stock.
One of the delays of a Pinterest IPO might be the challenge of figuring out how to best monetize the site. It seems to be backing off the “Buy” button it introduced earlier in favor of making money through traditional advertising and charging for “Promoted Pins”. This means it will be vying for its share of the estimated $30 billion that advertisers will spend on social media advertising in 2017.
How To Buy Pinterest Stock
If Pinterest does eventually go public, individual investors will have a difficult time buying the stock before the IPO day. Usually it is only company insiders, hedge funds, large dollar investors, and those who are well connected that get to buy in at the pre-IPO price. Investors who make up the bulk of the population and trade online will only be allowed to buy the stock once it opens for trading on an exchange the first day of the IPO.
Buying Pinterest stock after it opens for trading will be easy to do through any reputable online broker and all you will need to know is the ticker symbol. Pinterest’s stock ticker symbol will be announced a month or two before the IPO.
It should be noted that often times on well publicized IPO’s (and Pinterest might be one of those), investors collectively bid the stock up too high in their enthusiasm. The stock’s opening day hype leads to a stock price that falls in the weeks and months after it goes public. While it is impossible to know whether this will happen to Pinterest’s stock price after the IPO, it is something to be aware of before jumping in the first day.