Wall Street’s love-hate relationship with social media companies has been pretty evident this year. After climbing 91 percent this year, Twitter shares dropped 34 percent on recent Q2 earnings. Facebook shares have dropped 20 percent twice this year, and remain the laggard in the legendary FANG group of stocks. Snap shares, which once traded at $27 per share, are dipping into single digit territory.
Given the volatile nature of the relationship between Wall Street and social media darlings, investors naturally wonder when Pinterest, one of the world’s most highly valued unicorns, will pull the IPO trigger.
Quick answer: not until late 2019, even though the San Francisco interest sharing company continues to demonstrate impressive growth.
A high profile IPO
Launched a decade ago, Pinterest raised a total of $1.5 billion and was last valued at roughly $12 billion. According to recent media reports, the company generates an estimated monthly active user count of over 250 million and remains on track to generate $1 billion plus in annual revenue for this year. Pinterest is now challenging Facebook and Google for ad revenues as users and sales continue to grow on its platform.
For a detailed analysis of Pinterest please see our report here.
Assuming a revenue growth of 40 to 45 percent year-over-year growth, we estimate Pinterest’s revenue could exceed $2 billion in 2020. Applying a 10x EV/Revenue multiple, we estimate the company’s valuation could exceed $20 billion.
We continue to believe that Pinterest remains on track to go public in 2H:2019. The company is already accelerating its IPO plans by hiring some key executives. With Uber, Lyft and Airbnb also planning to go public the same year, 2019 could be a banner year for late stage private tech startups.
Consumers continue to love Pinterest
Overall, Pinterest users are extremely satisfied with the platform, according to our second annual survey of Pinterest users. Our poll was designed to identify the changes in brand awareness, usage frequency and likes/dislikes about Pinterest. We received a total of 4,365 responses that included existing 3,025 Pinterest users.
The percentage of respondents who use the platform daily has grown from 29 percent to 34 percent over the past year. We believe adding pins and receiving curated content are the primary features that drive users to the Pinterest platform. 61 percent of Pinterest users add pins to the pages of their interest at least once a week and 79 percent believe they receive catalogs of ideas relevant to their interests.
Surprisingly, the company once best known for swapping recipes and home décor tips has emerged as a formidable e-commerce site for high-priced goods. The percentage of respondents who said their goods sold at a value greater than $10,000 almost doubled over the past year.
However, fraud and authenticity remain the top concerns among both buyers and sellers. Over 30 percent of buyers and sellers consistently identified copyright issues, credit card fraud and authentic merchandise as their key concerns.
Other highlights from the survey:
Pinterest remains a Top 5 mobile app: Facebook, Amazon, YouTube, Gmail and Pinterest continue to be the top 5 sites consumers visited across 2017 and 2018. 44 percent of respondents chose Pinterest as one of their top visited sites. While fewer people used Gmail and YouTube compared to 2017, Pinterest users remained consistent over the past 12 months.
Competition from platforms such as Instagram has increased since 2017: The number of people who use Instagram to share interests has grown by 5 percent since 2017. With similar features as Pinterest, Instagram is emerging as a formidable competitor.
Pinterest’s e-commerce strategy appears to be succeeding: The percentage of people who use the platform to sell goods grew 9 percent over last year. In addition, the amount of goods sold with a gross value greater than $10,000 almost doubled from 39 percent in 2017 to 61 percent in 2018. The growth was consistent across different gross value categories ranging from > $10,000 to > $5 million.
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