Is Pinterest Stock a Solid Long Term Investment?

Pinterest

When The Wall Street Journal announced in February 2019 that Pinterest secretly filed the company as an initial public offering (IPO) stock. The total valuation of Pinterest Stock at the time had reached $12 billion USD. On April 18, 2019, it officially went public at $19 USD per share. By the closing of the day, it rose to $24.40 USD per share. In 2020, Pinterest reported a $1.7 billion USD advertising revenue, which was a forty-eight percent increase from 2019. On March 3, 2021, Pinterest announced its Pinterest Premiere, which is a video ads product that would appeal to a targeted audience based on their interests and other characteristics. Come April 2021, the chief financial officer (CFO), Todd Morgenfield, announced plans to invest more money in marketing as a means to offset potential slowdown activity as the American economy reopens while more citizens are receiving COVID-19 vaccinations. It was reported by Bloomberg on October 20, 2021, that PayPal had taken an interest in acquiring Pinterest with a potential price of $70 USD per share. PayPal’s board and management later decided that same week to back away from the investment. Shortly afterward, in December 2021, Pinterest acquired the editing and video creation app, Vochi. For investors who watch the daily events of the New York Stock Exchange, or at least casual investors who glimpse from time to time, is Pinterest still worth it as a long-term investment opportunity? Such is the case with all stock market investments, there is always a risk, but with the everchanging dynamics that has resulted in more people than ever doing business online, as well as social interaction, Pinterest still stands to be a solid long-term investment for interested buyers, at least for now.

About Pinterest

The concept behind Pinterest began with an application created by founders Ben Silberman and Paul Sciarra. It was called Tote, which served as a virtual replacement for printed catalogs. At first, Tote struggled as a business due to difficulties it ran into with mobile payments. At the time, there wasn’t a flurry of online payment methods as there are now, nor the sophistication to win over the trust of the consumer. As Tote, users amassed collections of personally favored items and shared them with another user. Inspired, Silberman shifted Tote to what Pinterest is today, which allows users to create collections of many different items and share them with each other online. Starting December 2009, the development of Pinterest was underway and the site launched in March 2010 as a closed beta prototype. Nine months later, Pinterest had 10,000 registered users. Silberman wrote to the first 5,000 users and offered his phone number in hopes to meet some of them, which he did. The launch of the iPhone app in early March 2011 managed to bring in more downloads than Pinterest expected, followed by an iPad app, Pinterest Mobile, and a version of the Pinterest site for non-iPhone users. Until the summer of 2011, Pinterest was run by Silberman and a few programmers out of a small apartment unit.

On August 10, 2011, Time Magazine listed Pinterest as one of the fifty best websites of 2011 in its article. By December 2011, Pinterest had become one of the top ten largest social network services on the internet with over eleven million visits per week. TechCrunch awarded Pinterest the Crunchies Award for Best New Startup of 2011. Come January 2012, comScore reported nearly twelve million U.S. visits were made in Pinterest, which made it the fastest site to break through the ten million unique visitor mark. During the 2012 Webby Awards, Pinterest was named Best Social Media App, as well as the People’s Voice Award for best functioning visual design. As of March 23, 2012, Pinterest updated its terms of service that eliminated the policy giving people the right to sell its users’ content. As of August 10, 2012, it was no longer part of the policy to require an invitation to join Pinterest or at least request permission for that matter. Starting in October 2012, Pinterest launched business accounts to allow businesses to either convert existing personal accounts or simply start from scratch. By April 2017, Pinterest removed a few features it felt became redundant to boards that are designed as user collection posts. Along the way, the original social network makeup of the Pinterest boards was gradually replaced with the emphasis on visual search and e-commerce shopping catalogs. The best part about Pinterest and why it has so many users is that access to the website and its content is free. Not only is Pinterest accessible through web browsers, but it also has apps for iOS and Android devices so that it can be accessed at any given time from any given location that has internet access.

Sign of the Times

The intent behind the creation of Pinterest to serve as an online catalog has since materialized from its social media ground roots into one of the central hubs for e-commerce businesses to pour their marketing resources into in hopes to convert customers over to their brand’s lineup of products and services. Pinterest has since become the visual search engine. The main highlight behind Pinterest sits in the name where users “pin” something of interest to their own board. This is an internet version of pinning an ad or memo to a community board in hopes to draw enough attention to it to either win an audience or make a sale. With Pinterest, such pins are saved and shared between users, each of them featuring links to take the user directly to the original source where the pin came from. Whether the landing page is designed as e-commerce or a hobbyist’s special interest site, the goal of the original “pinup artist” has been achieved, thanks to Pinterest.

In February 2013, ComScore and Reuters both stated Pinterest had 48.7 million users at a global level. In July 2013, the French social media agency, Semiocast, revealed the website had over seventy million users worldwide. In August 2016, Pinterest launched a video player that allows users to do more than simply pin pics. This now brings the catalog to life, so to speak, which serves just like a commercial otherwise seen on television. Women are the largest demographic that consistently visits Pinterest as users, which has been the case since the very beginning. It was reported in 2020 that over sixty percent of the global population that regularly use Pinterest are women. While men may not be the primary audience on Pinterest, there has been an increase of forty-eight percent since the start of the COVID-19 pandemic. Users between the ages of eighteen to twenty-five have grown twice as fast as users over the age of twenty-five, but it is the users within the age group of twenty-five to forty that have proven to be the driving force behind the growth of Pinterest.

This resulted in a growth of 150 million monthly active users by October 2016. By April 2017, Pinterest now had 175 million monthly active users. It grew to 250 million by September 2018, then grew to over 400 million as of July 2020. Does the COVID-19 pandemic have anything to do with the massive surge between 2018 and 2020? While the coronavirus crisis has definitely played a role, much has to do with the growing animosity among users who are looking to break away from social media sites that seemed to have lost touch on how to stay neutral on social-political matters that have been increasingly dividing the people. In 2020, Pinterest found itself slapped with a lawsuit by two former employees, Ifeoma Ozoma and Aercia Shimizu Banks, who made public statements about the code of conduct that was carried out at the company when it came to discrimination. The more the situation escalated, the more it hurt Pinterest. In December 2020, Pinterest paid its former chief operating officer a record-breaking $20 million USD settlement with a condition to have a better workplace environment for all its employees. As of November 2021, Pinterest settled a lawsuit regarding gender and racial discrimination that sees the company agreeing to pay $50 million USD to improve the overall work environment so that no employee has to be concerned about not fitting in, or whatever the social-political issue happens to be. It hasn’t been the first time Pinterest found itself having to contend with social-political issues as it has continually updated its website to keep it as positive and respectful as possible. Starting in December 2018, Pinterest blocked health misinformation from its recommendations engine, as well as blocked various searches, content, and user accounts. Pinterest goes to great lengths to protect its online community from misinformation, spam, as well as other abusive behavior.

Investment Track Record

Pinterest, Inc. officially began in December 2009 out of the small apartment located in Palo Alto, California before relocating the headquarters to San Fransisco. Early 2011 saw the company secure a $10 million USD in Series A funding that was led by Jeremy Levine and Sarah Tavel of Bessemer Venture Partners. Andreessen Horowitz added $27 million USD in funding in October 2011, which rose the value of Pinterest to $200 million USD. This resulted in Pinterest’s co-founder, Paul Sciarra, leaving his position at Pinterest in favor of a consulting job as an entrepreneur in residence at Andreessen Horowitz as of April 2012. Japan’s electronic commerce company, Rakuten, announced on May 17, 2012, it was leading a $100 million USD investment in Pinterest, along with Andreessen Horowitz, Bessemer Venture Partners, and FirstMark Capital. The base capital valuation was reported at $1.5 billion USD. This brought about the September 20, 2012 hiring of Amazon’s Jon Jenkins as Pinterest’s new head of engineering. Jenkens had been with Amazon for eight years, leading its engineering team, and was also a director of developer tools, platform analysis, and website platform. By the end of October 2013, Pinterest had secured a $225 million USD round of equity funding that valued the website at $3.8 billion USD.

Pinterest generated its first revenue in 2014 when it began to charged advertisers to promote goods to the millions of users the website has. Do-it-yourselfers, hobbyists, and vacation planners are just a few examples of special interest groups that were exposed to this feature. These ads promised to generate as much as $500 million in 2016. This resulted in investors placing an $11 billion USD value on Pinterest in 2015. As of 2017, Pinterest was valued at $12 billion USD. Come June 2017, Pinterest raised $150 million USD from its group of existing investors. In August 2020, according to SFGate, Pinterest forked out $89.5 million USD to cancel a large office space lease agreement of an incomplete complex that was located near Pinterest’s current headquarters in San Fransisco. This decision was made in light of the COVID-19 pandemic that has seen Pinterest join the ranks of many other companies who have since set up work-from-home options as opposed to gathering large groups of people into an office complex. The company, for now, has chosen to stay at its current headquarters in San Fransisco until further notice.

Pinterest’s Outlook

In 2020, buying into Pinterest Stock seemed more lucrative when the world craved more digital options and solutions as a result of the COVID-19 pandemic. With the pandemic wave seeming to be on its way out, many online users may consider spending less time on online platforms, including Pinterest. It is estimated that the price for Pinterest Stock will hit $50 USD by the end of 2022, then at $60 USD by the end of 2023. It is also estimated Pinterest’s value will continue to rise, potentially reaching $80 USD per share in 2023, then $90 USD in 2026, $100 in 2027, and perhaps $125 by 2030.

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