Pinterest Backs Off IPO Valuation
IPOs are a funny thing. Despite how good/bad your company’s business metrics are, your IPO valuation can be greatly influenced by the IPO just before yours from a firm in the same sector. This appears to be happening now with Pinterest, who’s dropped its pre-IPO valuation range about 20%, from the mid $12Bs into the mid $10Bs. So what’s happened with Pinterest over the past week to cause this decline? Absolutely nothing.
The reason Pinterest is backing off its opening valuation may have more to do with what’s happened to Lyft’s stock price since it went public a few weeks ago. After jumping on the first day to $78, Lyft has settled back to $74. I know a $4 decline might not seem like a huge deal, but for speculative investors looking for quick money in an IPO turn, any out of the gate drop reduces confidence in the next IPO to come along in the same sector. . . which in this case is Pinterest in the tech sector.
Pinterest is expected to go public over the next several weeks, so plenty of time for the valuation roller coaster to continue. More to come . . .