I used to think that Pinterest was only a “mom tool” for DIY artsy folks. But it has quickly evolved into a money making machine and social media behemoth.
It seems that a lot of people, specifically men, don’t understand Pinterest. To be honest, I don’t know if I understand it either sometimes, but I have been using it more frequently recently. I use it strictly for home improvement ideas. I can do a quick search on “gardening” or “shiplap” or “woodworking” and get thousands of ideas.
That’s the value that Pinterest brings specifically to me — idea generation. Pinterest describes its guided search as “It’s visual. Sometimes you don’t know what you are looking for until you see it”. Previously, I’ve tried to execute these types of searches on other social media sites or search engines. The results were always lacking and contaminated by promotions and search ranking hierarchies that never even came close to matching my preferences.
After you search for an item on Pinterest and find something you love, you can either purchase the item directly from a link or you could be redirected to a blog or Etsy store. Anytime I’m going to do a home improvement project, Pinterest is my first stop. Once I get the images and/or directions of what I want, I go and build it myself because I’m crafty like that. Meanwhile, Pinterest and its users get paid via advertisements on the community that they’ve created — as well as from promotions, collaborations, or affiliate links.
Check out some of these Pinterest statistics below. As I mentioned previously, men apparently don’t understand it since they only make up 19% of the user base.
Pinterest is planning on offering 75 million shares and listing this month around $15-17 per share which puts them at approximately a $10-11.3B valuation, below their previous private valuation of $12B. Unbeknown to me, there is actually a term for when a company goes public or sells below their most recent private valuation — it’s called an undercorn.
I’ve never really paid much attention to the fundamentals of companies that have recently gone public. Usually, I just get the snippets that I see in the news or on Twitter talking about “unicorns” and “oversubscribed” but I typically ignore them. Ben Carlson put out an interesting post recently on why IPOs are oversubscribed with some data on IPO returns.
Seeing as 2019 is slated to be a fantastic year for IPOs, I’ve recently collaborated with Canalyst to take advantage of their IPO models. Canalyst has a team that builds and updates financial models for IPOs plus 4,000+ other equities. They do the work for you. Don’t get me wrong, I absolutely love Microsoft Excel, but what I don’t love is spending my own time pulling data from an S-1 form and putting into a financial model.
Right now Canalyst is giving free access to their IPO models. Click here and use the code RAMP and they’ll send you the Pinterest model, plus their Uber IPO model as soon as it hits, and one more of your choosing. Canalyst’s pre-IPO models are built as soon as a company files their S-1 when the sellside is still on restriction.
I downloaded the Pinterest model that the Canalyst team updated on Monday and took a look under the hood. From a snippet of the model, you can see that Pinterest is growing their international user base at a pretty high clip. Their gross margins are also very high and the model predicts profitability for FY2019. I’ll let you go through the rest of the data in the model yourself but there is also a cash flow analysis, margin analysis, valuation metrics, and a number of other neatly organized financial metrics that will help you get a clearer picture of Pinterest and how it’s different from the other unicorns.
I’m hoping (hope is not a strategy) the Pinterest IPO turns out better than Lyft’s did — currently down -30% from the high set on the IPO day. I am much more interested in getting long this stock as I feel is it misunderstood and will continue to grow its user base and allow its users to make money and be more self-sufficient in this e-commerce era.
Let’s just say Pinterest piques my interest.