Why did Pinterest set an IPO price range below its last private valuation?

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Pinterest Sets IPO Price Range Below Last Private Valuation Amid Market Caution

Pinterest has established an initial public offering (IPO) price range of US$15 to US$17 per share, which would value the company at approximately US$11 billion. This valuation is notably lower than the US$12 billion valuation it achieved during its most recent private funding round. This pricing decision reflects a broader market caution regarding highly valued venture-backed companies, often referred to as "unicorns," following a lukewarm reception to the Wall Street debut of ride-hailing service Lyft.
Lower Valuation Reflects Market Apprehension for Unicorns

The decision to price its IPO below its previous private valuation signals a more conservative approach by Pinterest, influenced by recent market performance. The mixed response to Lyft's IPO on Wall Street has heightened investor scrutiny of large, venture-backed startups. This suggests that the market is applying greater diligence to the profitability and long-term prospects of companies seeking public listings, leading Pinterest to adjust its valuation expectations accordingly.
Financial Performance Indicates Path to Profitability Uncertainty

Pinterest reported a net loss of US$63 million in 2018, on revenues that reached US$755.9 million. While this represents an improvement from a loss of US$130 million on US$473 million in revenue in 2017, it underscores the ongoing challenge of achieving consistent profitability. The company generates revenue through its role in facilitating online shopping and through advertising, but its path to sustained profitability remains a key consideration for public investors.
User Growth and Revenue Streams Highlighted

The online visual discovery platform boasts approximately 250 million users globally. Pinterest monetizes its platform by integrating e-commerce functionalities, allowing users to purchase items directly from images, and through advertising. Projections from eMarketer anticipate Pinterest's global ad revenues to reach US$1 billion in the current year, though this would still constitute a small fraction of the overall digital advertising market.

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Why did Pinterest set an IPO price range below its last private valuation?

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