Pinterest IPO, How Does Pinterest Compare to Facebook and Instagram?
As with many other large social media services Pinterest’s IPO showed promise upon its initial public offering, however, over the past year since, Pinterest has seen a linear decline in its stock price. A tech company that aims to compete with some of the largest social media platforms like Twitter, Facebook, and Instagram is definitely going to have some difficulty doing so regardless of its history. Despite its market performance recently Pinterest remains a huge site with over 300 million monthly active users.
What is Pinterest?
Pinterest is a social media platform that allows users to add pictures and videos to their profile in the form of a “pin” to different “boards” which are designated for specific things such as travel or beauty. The layout is similar to Reddit in that it has different boards aimed at different topics with posts published by individual users that can then be liked and saved by other users. Pinterest was a groundbreaking social media platform when it was first created in 2009 and has since acquired a massive userbase nearing 50 million in 2013 and growing to 300 million as recently as 2019. Pinterest’s userbase mainly consists of women which make up roughly 80% of all users. Pinterest’s male userbase, however, is growing steadily where 60% of new signups are women and 40% are men.
Can a Pinterest IPO Compete with Big Social Media?
Sites like Facebook, Instagram, and Reddit are doing similar things to Pinterest. However, as much as they are doing similar things, it is clear that since Pinterest’s user base is remaining steady that other social media sites are still missing something the Pinterest is able to give its users. It is likely that Instagram will never create the same pin board layout as Pinterest, neither will Facebook or Reddit. Each social media application has its own demographic, and reason for existing. So, as a matter of fact, Pinterest can compete with big social media in terms of staying afloat and continuing to grow, but in terms of keeping investors happy, Pinterest may not have as much success as Facebook alongside the many social media and messaging platforms that Facebook owns, including Instagram, WhatsApp, and Messenger.
How Has Pinterest Performed Since its IPO?
Since its IPO, Pinterest stock has steadily declined and though it seemed promising after its IPO in 2019, seeing some growth over the next few months, since September of 2019 Pinterest stock has dropped from $34 to $18 nearly cutting in half. Pinterest has seen its revenue fall 8% over the month of April and a huge decrease in its advertising business during March as the pandemic hit. This could be just an impact from the coronavirus, given that other tech companies such as Google and Facebook have seen similar revenue decrease, or it could be a downward trend that will remain for a long time to come. Only time will tell with this stock, and we will need to continue to monitor its EBITDA to make sure its losses begin to decrease.
Should You Invest in Pinterest?
The question of whether or not you should invest in Pinterest is a difficult one to answer. Pinterest has a steady user base and continues to see user growth, showing signs that this company has no sign of slowing down. However, in the midst of a pandemic, it’s difficult to tell how a social media company might do. Given that larger companies in the same niche or seeing similar results it could be that Pinterest is simply suffering a temporary setback due to an economic recession. Pinterest stock is currently overvalued, showing bearish patterns, and does not look good for investment short-term or long-term. Regardless of Pinterest’s growing userbase and novel platform which can compete with larger social media platforms like Facebook and Instagram, it is this writer’s opinion that Pinterest is not a stock that you would invest in if you like sleeping soundly at night. Its performance over the last year has shown that it is a tech stock that is not performing as well as investors expected it to.
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