The image-sharing platform’s shares priced at $19 — $2 above the high end of its expected range — and the stock shot up 28.4 percent to $24.40 in its first day of public trading on Thursday.
That tagged a $12.8 billion valuation on Pinterest, which billed itself as a platform where ads and context happily comingle. The company has argued that it’s well-positioned to keep growing revenues as consumer brands move more of their marketing budgets online.
Pinterest logged revenues of $755.9 million last year and although it still has plenty of room to grow, it also has plenty of competition — Google, Facebook and Amazon’s advertising revenues weighed in at roughly $180 billion last year.
While the government shutdown in January delayed some IPOs, a flurry of offerings could also be a sign that companies sense a top in the market and are looking to take advantage and cash out.
Videoconferencing company Zoom also went public on Thursday while Farfetch went public in the fall and Levi Strauss & Co. held its offering last month. Additionally, VF Corp. is slated to spin off its denim business, Kontoor, soon and Gap Inc. plans to separate from Old Navy next year, making for two new publicly traded fashion companies.
“Certainly you want to IPO when the market’s doing well,” said Paul Nolte, senior vice president and portfolio manager at Kingsview Asset Management in Chicago. “You typically do see [more IPOs] at market tops.”
“It’s a sign,” he said. “But it’s not perfect. It does make sense to say, ‘OK, if I’m 100 percent equities, maybe I want to peel that back a little bit.”
Even though the market is still in the midst of an incredible run out of a recession that started more than a decade ago, it’s not run-for-the-hills time, in part because consumer fundamentals are relatively strong.
Nolte said there are “all kinds of crosscurrents going on in retail” with Amazon grabbing share and e-commerce increasing and stores closing, but underneath that, consumers are spending.
The official government tally of retail sales was released Thursday and showed a bounce back in March, when sales grew 1.6 percent.
“The retail sales figures that were out this morning certainly point to the potential that the first quarter is the low spot for the year and that things are going to bet better from here,” Nolte said. “That’s what the equity markets are anticipating.”
He also pointed to better wage growth, low unemployment and “reasonable” levels of consumer debt, outside student debt.
But for the whole market to move, businesses are going to have to figure out how to boost earnings.
“You get all the news coming out and some of the economic data is OK, the global data is not great and the equity markets will trade kind of poorly,” Nolte said. “What’s the impetus to move us significantly higher? It’s going to have to be much higher earnings, it’s going to have to be much higher economic growth. And right now, we’re not seeing that.”
Over the past year, the Dow Jones Industrial Average has risen 6.9 percent to close at 26,559.54 Thursday. In retail, the winners in the market have been the biggest on either side of the digital/physical divide. Amazon is up 21.9 percent to $1,861.69 over the past year while Walmart Inc. is ahead 17.8 percent to $103.18.
But many retail and fashion mainstays have struggled over the past year. Among the decliners are Gap Inc., down 12.1 percent to $25.97; Macy’s Inc., 14.7 percent to $25.08; PVH Corp., 17.9 percent to $132.20, and Tapestry Inc., 39 percent to $32.55.