Pinterest shares soared in their first day of trading Thursday as investors bet that the company has only begun to tap its potential.
The online image-sharing company’s stock closed at $24.40 Thursday, up 28% from a $19 offering price that was higher than Pinterest’s PINS, +28.42% expected range. The company raised more than $1.4 billion through the offering and notched a market value of more than $15 billion by the end of the day.
Through its initial-public-offering process, Pinterest positioned itself as a company with a strong base of loyal users but an underdeveloped strategy for making money off them. The company only started showing advertisements on its platform in 2014, and since then it has been mainly focused on larger brands trying to reach U.S. consumers.
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“We are still in the early stages of building an advertising product suite that fully taps the value of this alignment between Pinners and advertisers,” the company said in its prospectus, referring to Pinterest’s stance that its users are actively looking for content from businesses when they visit the site. The company says this differentiates Pinterest from other online services, where users might be trying to avoid branded content.
Pinterest, which lost $63 million last year on revenue of $756 million, sees big opportunity in tapping international advertisers and making it easier for small- and medium-size businesses to conduct campaigns on the site. International consumers accounted for 69% of Pinterest’s 265 million users last year, but they brought in far less money: Pinterest generated $3.16 per U.S. user in the fourth quarter but just 9 cents per international user.
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A key focus for Pinterest now is expanding self-serve advertising tools to overseas marketers. Such tools make it easier for smaller advertisers to start campaigns and measure effectiveness, and the company is beginning these efforts in Western Europe before moving to other “select” markets.
From a consumer perspective, the company is looking to make its platform more “shoppable” with tools that enable users “to go from inspiration to action” more quickly. Pinterest is also looking at category expansion: Its site is known for helping people explore trends around weddings, fashion, and home furnishings, but the company wants them to look at car, travel and financial content as well.
Thursday was a big day for technology IPOs, with Zoom Video Communications Inc. ZM, +72.22% also making its public debut. Shares of the videoconferencing company shot up 75% from their IPO price of $36. The two IPOs come as the Renaissance IPO ETF IPO, -0.89% has gained 29% on the year and as the S&P 500 SPX, +0.16% has risen 16%.
