Pinterest Inc. climbed as much as 33 percent in its trading debut after raising $1.4 billion in the year's second-biggest U.S. initial public offering, pinning investor hopes on a continuing listing surge.
Shares of the digital-scrapbooking company closed Thursday at $24.40 in New York trading, jumping 28.4 percent from its initial offering price of $19, giving the company a market value of about $12.9 billion.
The listing is second in the U.S. this year only to Lyft Inc.'s $2.34 billion offering in March. Their initial public offerings will likely be eclipsed by Uber Technologies Inc. The ride-hailing global behemoth will seek to raise about $10 billion in May in an offering valuing it at about $100 billion, people familiar with its plans have said.
Pinterest's strong showing, along with an even stronger first-day performance Thursday by Zoom Video Communications Inc., signals continuing investor interest in new stocks valued at $1 billion or more -- commonly called "unicorns" -- coming to market.
Zoom ended the day at $62 a share, up 72.2 percent from its initial offering price of $36, causing its founder and chief executive officer, Eric Yuan, to fret over the sky-high price putting pressure on the company going forward.
Other high-profile companies considering going public include Slack Technologies Inc., Postmates Inc., Palantir Technologies Inc. and Airbnb Inc.
"Today's opening pop in the shares of Zoom and Pinterest suggests that investors are not looking at 'risky' unicorns as a group, but instead are valuing each company on their merits," Alejandro Ortiz, principal analyst at SharesPost Inc., said in a emailed statement.
Fears that Lyft's sagging stock -- it's fallen 19 percent from its $72 initial price -- would bode poorly for other unicorns appear to have been overblown, Ortiz said.
Pinterest sold 75 million shares Wednesday for $19 each, after marketing them for $15 to $17. At the offer price, the initial offering valued the San Francisco company at about $12.8 billion, including restricted stock and options, according to data compiled by Bloomberg. Pinterest's last valuation, from a private funding round in 2017, was $12.3 billion.
The offering was led by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Allen & Co. Pinterest trades on the New York Stock Exchange under the symbol PINS.
Pinterest operates in a crowded digital marketing space, where Google and Facebook Inc. get the lion's share of ad dollars. Pinterest has taken a slow and steady approach to growth and making money from the service, compared with the faster expansion rates of Facebook, Twitter Inc., and Snap Inc. when they went public.
"We're really proud of the progress we made over the last few years," chief executive Ben Silbermann said in an interview. "We built out the business. We felt like we were at a point where the business had reached a level of predictability that it could be in the public markets."
Pinterest has a key advantage in competing for advertising dollars, Silbermann said. Unlike other sites, Pinterest users typically are looking to eventually buy what they are searching for, which lines up with what advertisers want, he said.
Pinterest said in its initial public offering filing that it reaches more than 250 million monthly active users. The company had about $756 million in revenue from online advertisements in 2018, a 60 percent growth rate that accelerated from the previous year. Its net loss shrunk to $63 million in 2018 from $130 million in 2017.
Most of its user growth is coming from international markets, where the average revenue per user is much lower than in the U.S. In 2018, more than 80 percent of new users were from outside the U.S., however, they generated about 25 cents per person compared with $9.04 for those in the U.S.
"We're going to continue to invest for the long term," he said. "We've shown really good margin improvement over the last few years. My eye is always on what's going to make Pinterest great three years, five years, 10 years from now. That's going to be how we continue to run the business."
Information for this article was contributed by Elizabeth Fournier, Olivia Zaleski, Shira Ovide, Emily Chang and Selina Wang of Bloomberg News and by Alex Veiga of The Associated Press.
Business on 04/19/2019