How Pinterest Makes Money

Pinterest has 265 million monthly users who bookmark images they find online by "pinning" them to themed inspirations "boards." Pinterest makes money by targeting ads at these users, selling "promoted pins" and click-to-buy shopping ads to businesses and hundreds of retail partners.

A note on Pinterest's $10B valuation: This represents the company's market cap vs its enterprise value of $11B.

Pinterest will debut on the stock market on Thursday at an initial valuation above $10 billion. In its IPO filing, the company said it lost $63 million last year on revenue of $756 million in revenue, with revenue growth of 60%.

The social network has 265 million monthly users who bookmark images they find online by “pinning” them to themed inspirations “boards.” That large user base is two-thirds women, and is highly valuable to advertisers. Pinterest sells targeted ads called “promoted pins” that appear at the top of users’ feeds and search results. Those ads brought in about $3 per user in 2018. It also sells click-to-buy shopping ads to businesses and hundreds of retail partners.

Pinterest was growing rapidly in 2012, but a recent CNBC report found that expansion was slowed by a cautious and sometimes overly passive culture at the company.

Pinterest raised $1.43 billion in its IPO after pricing the offering at $19 a share on Wednesday, valuing the company at $10 billion.

Pinterest, which is expected to start trading on Thursday on the New York Stock Exchange, had originally given a pricing range of $15 to $17. But investors appear to be showing an appetite for the social media company despite the challenges Lyft has faced since becoming the first consumer tech IPO of the year last month.

CNBC reported earlier on Wednesday that the company would price above the expected range. Pinterest’s revenue jumped 60% last year to $756 million, and the company moved significantly closer to profitability with a net loss of $63 million. Still, Pinterest’s IPO is below the $12 billion valuation it attained in a 2017 financing round.

Pinterest is among the first big tech IPOs of the year and is scheduled to start trading around the same time as videoconferencing company Zoom. Ride-hailing company Lyft was the first big offering to hit the market in March, but the stock has dropped 19 percent from its IPO price.

Founded in 2010 by Ben Silbermann, a former Google employee, and Evan Sharp, who was previously a designer at Facebook, Pinterest has grown to 265 million monthly users. The company burst into the mainstream in 2012 with rapid growth, but expansion has since cooled due in part to a work culture that many employees describe as slow when it comes to making decisions.

Silbermann’s stake is worth close to $1 billion at the offer price. Bessemer Ventures owns shares valued at $1.13 billion, while FirstMark’s holdings are worth $844 million and Andreessen Horowitz’s stake is worth $827 million.

Goldman Sachs and J.P. Morgan Chase are leading the offering.

About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.

Connect with CNBC News Online

#CNBC
#Pinterest

How Pinterest Makes Money

[dbsirius]

you can't even browse pinterest without a sign-up screen covering the screen.

[ilener]

So many comments complaining about being butt hurt over not being allowed to see Pinterest pics without signing up. So freaking what, the site is great and they keep it private like all things worth something. The site is free to use (other than having ads here and there). I love it and so do all my artsy friends. It keeps all your creative boards organized and it’s useful. The site isn’t anything more than a place to store pictures of stuff that inspires people to create something, being social there is very optional because having private boards is such a thing. Can’t believe so many people here are knocking it without trying it, it reminds me of toddlers saying new food is yucky without tasting it. Grow up.

[RonVillejoConsulting]

Pinterest may be slow to decide and act, so may not have the big results of its giant competitors. But if that slowness actually means being careful and avoiding mistakes, then I'd say the company can expect really healthy results over time.

[jessykaha.]

I love Pinterest!
I'm actually glad they are growing slower, as someone who now sees Pinterest as an undervalued resource, I definitely plan to utilize it more proficiently moving forward.

[doomtomb]

If you dont pay for the product, you are the product.

[kiDkiDkiD]

I still don't know what Pinterest is.

[siddharthg]

Why do many people talk about a tech company as if they all are meant to be like Facebook or Uber. Some companies will be small, some gigantic.

[Arjay]

I thought for sure selling data would have also been a way that pinterest makes money. Pinterest is very good for brands to see what products people are actually interested in. In a way it's like hiring these users to rate their products, which would be a very powerful knowledge for brands to have and unlike say Facebook, I don't think most users would care, Facebook your whole life, while Pinterest would only be able to sell what fashion/furniture trends you are in to, not something I think most people feel they need to keep private.

[seemaagarwal]

Through this video,
I came to know that, Pinterest actually sells something

[WishpondCA]

Pinterest is such a great idea, it's a pity they're struggling to make money

[bryannagipson]

So funny i spaced out in the middle of this and came back thinking i was watching an advertisement lol

[Garapetsa]

It's the cookies...same with YouTube, or any social media so called free site.
They capture your tastes...then sell custom ads...they sometimes sell emails. This way marketers can dangle spam.

[agnesgitacahyandari]

Been using pinterest since 2013 and I love it!

[susancorgi]

I love pinterest. Endless ideas. Say whatever.

[aimeebella]

Pinterest is awesome especially when I want to DIY a room or furniture.
Also like the recipes that are rated by other pinners
Other than yt it’s the only other social media I use.

[prchix]

I remember using Pinterest when it was new and there were few ads, it was great

[dzikrinasaira]

I like using pinteredt bcz it gives me so much good idea about DIY stuff, decor, wallpaper, fashion, etc. And it often lighten my day up whenever I see picturesque and splendid images there :)

[ceeril]

Kudos to the person who wrote the description.

[pheonixInSky]

Through pinterest, I enjoy watching beautifull scenery and paintings.

[thomasoconnor]

Here is something you may want to spend a whole video on. Stolen Pinterest Pins.
I, as an organic Pinner, have a significant problem with Stolen Pins.
In particular, how would Pinners who pay Pinterest for ads feel if they knew that Pinterest has no way of stopping pins from being stolen?
Then on top of it, they have a Not user-friendly interface for Submitting Pins I should record the constant scrolling up and down for entering the info for every pin - well over 100 pins in the past month and a half.
Take note Pinners who pay for ads. Pinterest cannot stop pins from being stolen. Strategy #1 Monday mornings find and submit stolen pins.