(Reuters) – the Shares of Pinterest Inc. increased from 25 percent in their debut on Thursday, giving the online scrapbook company with a market capitalisation of $15.8 billion and the signalling of an increased interest of investors for new tech offerings.
The successful debut is a good omen for the U.S. IPO market as it prepared for the launch of the long-awaited list of ride-hailing giant Uber Technologies, in particular, after the smaller rival Lyft Inc. the struggle to hold on to his debut gains.
Investors are hopeful that Pinterest, the most high-profile social media company in the US. since Snap Inc in 2017, will have a better run in the market, given the ability of the company to increase sales and increase the customer base.
The shares of the company opened at $23.75, well above the $19 and they were priced at, and hit a high of $24.99 in the first hour of trading.
“When you see an initial pop in price like this it is a pretty clear indicator of interest is strong out of the gate,” Chris Larkin, senior vice president of trading at E*TRADE Financial Corp said.
Adding to the upbeat sentiment of the investors was a successful debut by Zoom Video Communications, a technology company that grew from 80 percent higher than the IPO price of $ 36.
Pinterest allows users to search for various topics, from home improvement projects, travel tips, as a result, often see handy infographics.
It also allows users to create social “boards” that relate to certain topics or themes, and earn money through ads, which are placed under the “pins” or posts that users upload on the site.
In 2018, the company’s top line increased by more than 150 percent from 2016 until and including $756 million, while net income fell by two-thirds more than in the same period of $63 million.
The company expects to report 291 million global monthly active users as of March 31, an increase of 22 percent compared to a year earlier.
Pinterest is a clear path to profitability and a good return on the investment, Haran Segram, professor of finance at the NYU Stern School of Business, said. “This company is on the right track.”
Segram, but warned that the company was overvalued.
“On the basis of my analysis, I think this company is expensive or overvalued.”
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Ipo’s of Pinterest and other such loss-making unicorns — start-up companies with valuations of at least $1 billion have presented a perilous situation for investors sitting on the fence.
While they do not want to miss popular companies with a fast growth, but at the same time, weighing the risks of companies with unproven economics.
Pinterest the initial public OFFERING was concluded by a 12-member team that Goldman Sachs and JPMorgan.
Reporting By Aparajita Saxena in Bengaluru, Additional reporting by Bharath Manjesh; Editing by Sriraj Kalluvila and Sweta Singh