Pinterest confidentially filed paperwork with the Securities and Exchange Commission for an initial public offering of stock, people familiar with the matter told The Wall Street Journal. The online-image search company is expected to seek a market value of at least $12 billion with a listing that might come in late June.
The company, as of September 2018, had more than 250 million monthly users of its app and website. Ad sales on Pinterest rose 50% to more than $700 million in 2018, a person familiar with the matter told the Journal.
Pinterest is among the tech-related companies that are expected to go public this year. Ride-hailing company Lyft may start trading by the end of next month, while rival Uber also filed paperwork for an IPO. Workplace-messaging provider Slack Technologies submitted a filing for a direct listing.
Pinterest was launched in 2010 at a time when the social media industry was in its infancy, but the company hasn't developed an audience as big as those for Facebook, LinkedIn, Instagram and YouTube. Still, marketers favor Pinterest because a platform built around people sharing images of products and creative ideas is well suited for ads. If Pinterest's IPO successfully fills its coffers, the company is likely to invest more heavily in building out its offerings for marketers.
Pinterest, like every company that depends on digital advertising, needs to differentiate its content and features as much as possible from Facebook and Google, the so-called "duopoly" that dominates the online ad market. Pinterest's U.S. ad growth is forecast to grow 30% to about $1 billion by the end of next year, according to researcher eMarketer, but it's not clear if the company is profitable. Pinterest will have a tiny 0.7% slice of the U.S. digital ad market by next year, eMarketer estimated.
Pinterest's key strengths as a marketing platform are its image search capabilities and potential to drive digital commerce. Users flock to Pinterest for inspiration when planning special events like weddings or home renovations. Its users express their interests in products by their pins, which is highly insightful for marketers.
"Pinterest has a strong argument to make as an advertising platform because of its visual nature and the aspirational way in which users engage," Andrew Lipsman, a principal analyst at eMarketer, said in a statement shared with sister publication Mobile Marketer. "Ultimately, it will have to prove that its ads are effective in building brands and driving commerce."
Pinterest has taken several steps to appeal to mobile marketers in the past six months. The site in August 2018 offered to all brands a bigger "max.width" ad format that's about four times bigger than its standard video ads and fills out the width of a smartphone screen. In October, Pinterest debuted Product Pins that show up-to-date pricing and inventory information and also have direct links to a checkout page on a retailer's site to make a purchase. This month, the company automated curation of its Shop the Look feature to reduce dependence on human employees to match images with products.
Pinterest may end up being more similar to Twitter and Snapchat parent Snap in having a more limited audience. Snap was the last social media company to go public and now has a market value of about $12 billion. Its stock is now about 44% below its IPO price of $17 a share two years ago. Although Snap's revenue is growing, the company has yet to report a profit and Snapchat's user growth has stalled.