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Ahead of IPO, Pinterest sets price target below last valuation

Pinterest Inc. may not hit the stock market at the valuation its executives and investors had hoped for.

The company, whose scrapbooking-focused social network has more than 250 million users worldwide, will debut on the New York Stock Exchange next week.

Pinterest disclosed in a regulatory filing today that it plans to sell 75 million shares at $15 to $17 a piece. That works out to a valuation of $10 billion to $11.3 billion when factoring in restricted shares and stock options, a significant drop from what the company was worth after its last funding round.

Pinterest received a $12.3 billion valuation in June of 2017 when it raised $150 million from investors. The company has taken in $1.5 billion across all its rounds, which means its backers will be closely watching next week’s IPO. The New York Times reported that some of Pinterest’s investors stand to lose money if it goes public with a valuation below $12 billion.

The social network is headed to the stock market hot on the heels of fellow tech unicorn Lyft Inc., which had a rather bumpy trading debut. Lyft closed its first day as a public company last month with its shares down 9 percent. The stock has since edged back and is now slightly above the original IPO price, but the lukewarm reception that the ride-hailing provider received is certainly worth taking into account.

Like Lyft, Pinterest is growing rapidly but has not yet turned a profit. The company increased sales by 60 percent in 2018, to $755.9 million, while losing $63 million, down from a $130 million loss the previous year.

The fact that the social network is narrowing its losses while still managing to maintain rapid revenue growth may help it navigate the IPO process more smoothly than Lyft, which has no immediate path to profitability. The ride-hailing provider lost $911 million in 2018, up 32 percent year-over-year on revenue of $2.2 billion.

It’s worth nothing that Lyft raised its IPO target price range shortly before going public, which Pinterest may do as well if there’s enough interest on Wall Street. In conjunction with the release of its target price, the company today launched an investor roadshow to promote its shares to banks and other potential buyers. 

Pinterest will debut on the NYSE under the ticker symbol “PINS.” Goldman Sachs Group Inc., JPMorgan Chase & Co. and Allen & Co. are the main underwriters for the offering.  

Photo: NYSE

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