Pinterest’s share price plunged 17% below its IPO price of $19 on Friday before closing the day at $20.86.
When Pinterest finalized its plan to go public in April this year, the market was excited causing a 25% jump in the firm’s shares on its first day of trading at the New York Stock Exchange.
But on Friday morning, the company’s shares went as low as $18.71 sending hours of panic across the market. The price dip comes in the wake of hard times for newly listed companies, with some opting out altogether. An article by CNBC highlighted how several tech giants have been struggling ever since they went public. So the question in the minds of many is – will Pinterest beat the “precedent” set by other tech companies?
Ever since it published its third-quarter results, the firm’s share price has been quite volatile. The results were disappointing to many, analysts had predicted a quarterly revenue of $280.6 million but it ended up with $279.7 million. Pinterest also missed estimates for its 2019 full-year outlook.
According to a report by CNBC, the key numbers that affected the image-sharing site’s market price include:
- Earnings per share:1 cent, excluding some items, vs. 4 cents loss forecast by Refinitiv
- Revenue:$279.7 million, vs $280.6 million forecast by Refinitiv
- Monthly active users:322 million, vs. 311.8 million forecast by FactSet
- The average revenue per user: 90 cents, vs 91 cents forecast by FactSet
In its yearbook estimates, the firm set its annual revenue between $1.1 to 1.15 billion; however, that may not be realized if the past three quarterly results are anything to go by. According to Refinitiv, Analysts were expecting sales of $1.12 billion.
But Pinterest has shown a unique set of “abilities” that analysts couldn’t help but notice. Compared to much larger rivals including Google and Facebook, Pinterest is growing at a very fast rate. The tech company’s sales grew 47% according to its recently released quarterly results compared to the same period last year, topping Google and Facebook’s 28% and 17% growth rates respectively.
In a statement, Pinterest CEO Ben Silbermann said the company had taken restructuring measures during the third quarter to “help people discover new ideas they didn’t know about,” and to “make the service more intuitive.”
Pinterest is yet to record a net profit even as investors continue to peg their hopes on the firm’s projections. The company plans to adjust its 2019 loss by $10 to $30 million, a range that’s narrower than the earlier projected $25 to $50 million.