On ‘PINS’ and needles
Pinterest begins trading on NYSE.
Pinterest has pinned itself to Wall
Street.
Shares of the digital scrapbooking site rose more than 28% in their public debut Thursday on the New York Stock Exchange. The San Francisco-based company’s stock, trading under the symbol “PINS,” closed at $24.40, up $5.40 from the IPO price of $19 each.
Pinterest raised about $1.5 billion, based on 75 million shares in the offering. The deal’s underwriters had the option to purchase an additional 11.25 million shares.
Pinterest is one of a lineup of technology-based initial public offerings set to begin trading including ride-hailing company Uber. But the aftermath of competitor Lyft’s recent IPO has some Wall Street watchers wondering if the upcoming batch of IPOs may be overvalued.
Lyft, which conducted its own IPO in March, now faces two class-action lawsuits, filed in California state court by investors who say the company overstated its market position at 39% in its IPO, Bloomberg reported. Since going public, Lyft shares have declined about 23%.
Warwick Business School professor John Colley said before the stock began trading that Pinterest’s valuation was too high and based on unrealistic expectations.
“Astronomic valuations are popular in Silicon Valley, but there is surprisingly little real evidence supporting those valuations,” he said in a commentary on the IPO. “This ... valuation reflects the wall of money looking for tech investments, rather than any fundamentals of Pinterest’s business. It is a similar story with other tech IPOs such as Uber, Lyft, and Snap.”
Still there are others who think Pinterest’s prospects aren’t so bad.
Pinterest has “many positive attributes which will help support optimistic expectations,” including growth that outpaces digital media companies such as Twitter and positive usage trends, says Brian Wieser, global president for business intelligence at media investment firm GroupM, in a blog post about the IPO. “There’s no reason to expect that growth won’t continue in the near-term, even if the specific pace will be difficult to anticipate with much precision,” Wieser said.