After initially setting a goal of a US$12 billion valuation for its upcoming initial public offering (IPO), the social media firm Pinterest has now revealed a slightly lowered target for its stock market debut. According to the company's updated prospectus, Pinterest stocks will be offered at a range of US$15 to US$17 per share. Even if it gets purchases at the higher end of the range, the company will still be way below its target of US$12 billion. At the higher end of the range, including stock options and restricted stocks, the company would be only be valued at around US$11.3 billion.
In 2017, the company was valued at around US$12.3 billion. Pinterest is expected to go public anytime this month. The company plans to be listed in the New York Stock Exchange under the symbol "PINS." The company has already reportedly started its national road show to persuade investors to buy its stocks. If there is a high demand from investors in the coming days, the company may raise its prices prior to its IPO.
The dialed-down stock prices by the company have now created new concerns amongst investors, who are now questioning the returns on the wave of new tech startups planning to go public this year. The first tech startup to dip their toes in the water this year was ride-hailing firm Lyft, which officially went public last month. Despite the hype that it had created, Lyft shares performed poorly in its first few days of trading. The stock fell well below its offering price on its second day of trading, raising questions about its future performance.
Market analysts explained that Pinterest may have realized that it couldn't overprice its initial offering given Lyft's recent run in the stock market. Despite the hype and the forecasted demand, new tech startups may not do very well if they don't price their stocks just right at the very start. Companies such as Pinterest, Lyft, and Uber all have one thing in common; they are currently not making any money and are all basically unprofitable. However, investors are betting on these companies simply because they could be the next Amazon.
Lyft and Pinterest's performance in their respective public debuts will undoubtedly become the benchmark for other tech startups going public this year. Investors are currently waiting for Uber, the largest tech startup to go public this year, to announce their offer prices and IPO date. The ride-hailing giant is expected to go public in the next few months. Uber currently has a standing valuation of around US$120 billion, making it the largest IPO by an American company when it goes public. Other smaller tech startups that are planning to go public this year include Zoom, PagerDuty, and Slack.
