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Cramer Remix: Big banks have kicked off earnings season in a surprising fashion

CNBC’s Jim Cramer on Thursday said the banking sector reported positive earnings results over the past week and that the stocks remarkably were able to rally on the news.

“Mad Money” host said.

The big banks delivered their numbers between Friday and Wednesday. The rallies were led by big returns in J. P. Morgan Chase and Morgan Stanley, with 7.6 and 7.7% gains, respectively, Cramer said. Citigroup increased 7% on a decent report, while Bank of America and Goldman Sachs rose between 2% and 3%, although their results were not the most ideal, he added.

Wells Fargo, who is running without a CEO since the resignation of Tim Sloan last month, was the only major institution to see its shares fall. But Cramer said its 0.4% decline was not all that bad considering the stock dropped 2.5% after its earnings call last Friday.

“On the one hand, when the expectations get low enough, it doesn’t take much to produce a strong result — that’s been the case with many of these,” the host said. “On the other hand, some of the major financials reported genuinely fantastic growth numbers and it’s a wonder that they’re doing that well during what should’ve been a less-than-stellar quarter.”

Get more insight here

Thursday’s session signaled that the market is “getting genuinely overexuberant” and the major averages could become wobbly if more IPOs become overvalued in the near future, Cramer said.

Pinterest and Zoom made a big splash in their debuts to public markets, while other unicorns like Uber and Slack, among others, sit in the pipeline. The Dow Jones Industrial Average added 110 points on the day, the S&P 500 gained 0.16% and the Nasdaq Composite inched 0.2%.

“If we get a few more of these red-hot, yet hopelessly overvalued deals … the averages will start to feel the pressure,” the host said. “That will lead to a sell-off like we haven’t had in ages as investors dump existing stocks to raise cash for the next big IPO.”

U.S. markets will be closed on Friday in observance of Good Friday. Cramer said a “crazy week” of trading will follow on Monday. Earnings season has been positive thus far, but it can be “crushed” by an “avalanche of new supply,” he added.

As more than 100 S&P 500 companies report next week, the host warned not to trade stocks off headlines that look positive or negative because it’s a losing strategy.

“Today we got the first taste of what I believe will be many more deals that are just too expensive for my taste. So keep that in mind,” he said. “Even as I expect some terrific quarters buried in next week’s cacophony of earnings reports, call me wary.”

Click here for Cramer’s game plan next week

The debuts of Pinterest and Zoom Video Communications on public markets also came with froth, which could lead to a market peak, Cramer said.

Froth is a trading environment that usually precedes a market bubble.

“The top of the market always comes when there is tremendous euphoria, and today we saw that euphoria in the two deals that went off hot,” he said.

After a $19 IPO, Pinterest closed its first day of trading at $24.40 — more than a 28% gain. Zoom originally priced its shares at $36. It settled at $62 at the end of the day — a more than 72% run.

Pinterest is selling at 21-times 2018 sales, not earnings, on the New York Stock Exchange. On the Nasdaq Composite, Zoom is trading even higher — 46-times fiscal 2019 sales, not earnings, Cramer said.

The host said he likes the prospects that each of these companies have, but the stock prices could be running in worrisome territory.

Read more here

Five Below, the discount chain of about 750 stores across the country, is testing out a more expensive format: Ten Below.

The concept pilot began in 2018 and, while the company has no plans to ditch the “Five Below” brand, CEO Joel Anderson told Cramer it is about bringing customers more value.

“We continue to innovate, and that’s one of the areas we’re innovating and testing higher price points,” he said.

Watch the full interview here

The stock market trends could be preparing to shift, and it’s important that investors diversify their portfolio to get exposure to different industries in order to keep making money, Cramer said.

“If you’re diversified you will be the angler king, if you aren’t, between the sharks and the seawater, I’ll tell you what’s going to happen: you’re going down,” he said.

Get Cramer’s full thoughts here

In Cramer’s lightning round, the “Mad Money” host gives his thoughts to callers’ favorite stock picks of the day in rapid speed.

Signet Jewelers Ltd.: “I think Signet’s really gotta find its calling. It needs to find out its calling, ’cause it sure wasn’t calling in that last quarter. We gotta wait.”

Funko Inc.: “The reason why they’re all over the place [is] ’cause they have some of the absolute best toys … I’m not just saying Funko’s great because this is available in no store. But I have to tell you, I think Funko is gonna have a good quarter and I like the fact that they got that Disney calendar … So I say [buy].”

Marvell Technology Group Ltd.: “You know what. I’m partial to Marvell. I happen to like the board. I think they’re trying to make something happen. [Buy].”

Disclosure: Cramer’s charitable trust owns shares of Five Below, Citigroup, J. P. Morgan, and Goldman Sachs.

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Source: IPOs
Author: Continue reading Cramer Remix: Big banks have kicked off earnings season in a surprising fashion

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Cramer: Overvalued stocks like Pinterest, Zoom could lead to a market peak

The debuts of Pinterest and Zoom Video Communications on public markets also came with froth, which could lead to a market peak, CNBC’s Jim Cramer said Thursday.

“Mad Money” host said.

After a $19 IPO, Pinterest closed its first day of trading at $24.40 — more than a 28% gain. Zoom originally priced its shares at $36. It settled at $62 at the end of the day — a more than 72% run.

Pinterest is selling at 21-times 2018 sales, not earnings, on the New York Stock Exchange. On the Nasdaq Composite, Zoom is trading even higher — 46-times fiscal 2019 sales, not earnings, Cramer said.

The host said he likes the prospects that each of these companies have, but the stock prices could be running in worrisome territory.

“Now that investors or traders or flippers are beginning to pay outrageous multiples to sales, not earnings, but sales, beware,” he said. “That’s a train that is headed to overvaluation hell and you will have to jump off it before it crashes.”

Cramer rehashed his argument that an oversupply of high-priced stocks could put a dagger in the longest bull run in stock market history. Lyft‘s IPO bust, he said, was powered in part by the shareholders that were allowed to sell the stock instead of adhering to a lock-up period that could have ranged from 90-180 days.

“The lack of an effective lock-up crushed buyers, and I had hoped would quell enthusiasm for further deals,” Cramer said. “That, however after today, is clearly not the case. So we are going to bring a whole new class of unseasoned investor[s] into this market who are gaming the IPOs and that kind of investor usually arrives after the easy money is made.”

Cramer also said he’s concerned that there isn’t enough money available in growth-focused mutual funds to buy into the IPOs that are in the pipeline. The majority of new money being invested in the market has gone toward index funds, he pointed out.

“That means they can’t be buyers as these new stocks of courses aren’t in indices,” he said. “What will happen is growth funds will have to sell some of their holdings in order to buy these new holdings and, by the way, that happened all morning today.”

Furthermore, there has been a limited amount of supply on Wall Street, which means “there isn’t a lot of excess stock flying around,” Cramer said. Buyback programs have also shrank the volume of stocks available to trade, which could be counterproductive because stocks have rallied so much this year, he added.

That could create dangerous investing scenarios for the anticipated deals in Slack, Uber, and Palantir, he said.

“If you heard about the first-day gains in stocks like Pinterest and Zoom and you haven’t been in the racket, you are going to go to the gaming tables and hope to get some stock on the next deals,” Cramer said. “I am talking about the worst kinds of holders. Holders that are your enemy if you are in a stock that they dominate.”

There’s no need to panic yet — Thursday was just day one, he said.

“As these deals flood the market though, you will see across the board pressure as existing stocks are liquidated to buy the new ones,” Cramer said. “Selling cheap to fund expensive, like Pinterest, like Zoom, is a loser’s game, but may will end up playing it.”

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Source: IPOs
Author: Continue reading Cramer: Overvalued stocks like Pinterest, Zoom could lead to a market peak

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UPDATE 4-Pinterest, Zoom shares surge in market debuts after IPOs

(Updates with closing prices of Pinterest and Zoom)

April 18 (Reuters) – Shares of Pinterest Inc surged almost 30 percent in their stock market debut on Thursday, valuing the online scrapbook company at around $16 billion and signaling investor appetite for new tech listings.

That bodes well for the U.S. IPO market as ride-hailing company Uber Technologies Inc prepares for its highly anticipated debut, particularly with shares in smaller rival Lyft Inc floundering below their March offering price.

“All of the gyrations that you read about in the press and the drama that you read about in other cases, we can certainly fall victim to a lot of those things if we are distracted by the news cycle or things that are short-term by nature,” Pinterest Chief Financial Officer Todd Morgenfeld said.

“But we’re focused on building the best version of Pinterest we can over the next several years.”

Pinterest shares opened at $23.75, well above the $19 they were priced at, and closed at $24.40

Zoom Video Communications Inc shares also surged in the U.S. video conferencing company’s first day of trading on Thursday, closing 72 percent above their IPO price of $36.

“It is a very favorable market at the moment,” Zoom Chief Financial Officer Kelly Steckelberg said in an interview. “Investors really see the opportunity for ‘software as a service’ companies.”

Investors are hopeful that money-losing Pinterest, the most high-profile social media company to list in the United States since Snap Inc in 2017, will have a strong run in the market, given the company’s ability to grow revenue and increase its user base.

“When you see an initial pop in price like this it’s a pretty clear indicator interest is strong out of the gate,” said Chris Larkin, senior vice president of trading at E*TRADE Financial Corp.

‘RIGHT TRACK’

Pinterest allows users to search for topics like home improvement projects and travel tips, with results often showing handy infographics. It also lets users create themed social “boards.”

The company brings in revenue through advertisements, which are placed among the “pins” or posts that users upload on the site.

Pinterest had a net loss of $63 million on revenue of $756 million in 2018. It expects to report 291 million global monthly active users as of March 31, up 22 percent from a year earlier.

Pinterest was showing a clear path to profitability but was overvalued, said Haran Segram, a professor of finance at New York University’s Stern School of Business.

The IPOs of Pinterest and other loss-making unicorns – startup companies with valuations of at least $1 billion – have presented a predicament for investors.

While they do not want to miss out on popular companies with fast growth, they also have to weigh the risks of businesses with unproven economics.

Pinterest’s IPO was underwritten by 12 banks led by Goldman Sachs Group Inc and JPMorgan Chase & Co.

(Reporting by Aparajita Saxena in Bengaluru, Additional reporting by Bharath Manjesh, and Joshua Franklin and Carl O’Donnell in New York; editing by Sweta Singh and Rosalba O’Brien)

Source: IPOs
Author: Continue reading UPDATE 4-Pinterest, Zoom shares surge in market debuts after IPOs

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Pinterest and Zoom went just went public—Here’s what three experts say investors should know

10 Hours Ago

Social network Pinterest and videoconferencing company zoom went public on Thursday. Zoom reported revenue in its latest fiscal year of $330.5 million, while Pinterest generated sales of $755.9 million. Despite being less than half the size, Zoom is being given a higher valuation because it’s growing faster and is profitable. Zoom had net income for the year of $7.6 million. Here’s what experts say to look for in both stocks now.

Source: IPOs
Author: Continue reading Pinterest and Zoom went just went public—Here’s what three experts say investors should know

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UPDATE 3-Pinterest, Zoom shares surge in market debut after IPOs

(Adds comments from Pinterest and Zoom CFOs)

April 18 (Reuters) – Shares of Pinterest Inc surged 25 percent in their debut on Thursday, giving the online scrapbook company a market capitalization of $15.8 billion and signaling increased investor appetite for new tech listings.

The successful debut bodes well for the U.S. IPO market as it readies for the much-awaited listing of ride-hailing giant Uber Technologies, particularly after smaller rival Lyft Inc’s struggles to hold onto its gains since its flotation earlier this month.

“All of the gyrations that you read about in the press and the drama that you read about in other cases, we can certainly fall victim to a lot of those things if we are distracted by the news cycle or things that are short-term by nature,” Pinterest Chief Financial Officer Todd Morgenfeld said in an interview.

“But we’re focused on building the best version of Pinterest we can over the next several years.”

Investors are hopeful that Pinterest, the most high-profile social media company to list in the United States since Snap Inc in 2017, will have a strong run in the market, given the company’s ability to grow revenue and increase its user base.

Its shares opened at $23.75, well above the $19 they were priced at, and touched a high of $24.99 in its first hour of trading.

“When you see an initial pop in price like this it’s a pretty clear indicator interest is strong out of the gate,” said Chris Larkin, senior vice president of trading at E*TRADE Financial Corp.

Thursday also saw a successful debut by U.S. video conferencing firm Zoom Video Communications, which soared 80 percent above its IPO price of $36.

“It is a very favorable market at the moment,” Zoom Chief Financial Officer Kelly Steckelberg said in an interview. “Investors really see the opportunity for Software As a Service companies.”

“RIGHT TRACK”

Pinterest allows users to search for topics from home improvement projects to travel tips, with results often showing handy infographics.

It also lets users create themed social “boards.” It earns money through advertisements, which are placed among the “pins” or posts that users upload on the site.

In 2018, the company recorded a net loss of $63 million on revenues of $756 million. It expects to report 291 million global monthly active users as of March 31, an increase of 22 percent from a year earlier.

Pinterest was showing a clear path to profitability but was overvalued, said Haran Segram, professor of finance at NYU Stern School of Business.

The IPOs of Pinterest and other loss-making unicorns – startup companies with valuations of at least $1 billion – have presented a predicament for investors.

While they do not want to miss out on popular companies with fast growth, they also have to weigh the risks of businesses with unproven economics.

Pinterest’s IPO was underwritten by a 12-member team led by Goldman Sachs and JPMorgan.

(Reporting by Aparajita Saxena in Bengaluru, Additional reporting by Bharath Manjesh, and Joshua Franklin and Carl O’Donnell in New York; editing by Sweta Singh and Rosalba O’Brien)

Source: IPOs
Author: Continue reading UPDATE 3-Pinterest, Zoom shares surge in market debut after IPOs

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Have We Seen The Last Frannie Net Worth Sweep?

Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) are two companies that have been giving all of their earnings to the government since the beginning of conservatorship in 2008. The government structured their equity position such that their senior preferred stock takes 100% of the net earnings above and beyond a discretionary $3 billion capital buffer at the enterprise level for both companies. The government’s liquidation preference on its preferred makes it so that a liquidation would result in not very much, if anything, for non-governmental shareholders.

Investment Thesis

I believe that this is a recapitalization. Treasury’s Mnuchin previously said capital would be part of any solution. FHFA’s Calabria co-authored a ~50-page paper talking about how the net worth sweep departs from the stated purpose of HERA, which never envisioned an equity investment during conservatorship in the first place. The equity investment at the time was structured so that FHFA could use its discretionary accounting authority to write down assets, causing the Treasury to invest systematically into Fannie and Freddie senior preferred stock. Those assets were revalued, but not before implementing the net worth sweep that transferred their value directly to Treasury. Shareholders filed suits and have not successfully gotten an injunction or any court award so far, but there is an en banc ruling coming out of the fifth circuit that may accelerate this recapitalization. Outside of that, the government has said that it will take action to handle the Fannie Mae and Freddie Mac.

The purpose of this article is to outline why I think that it is now reasonable to believe that the last net worth sweep payment may have been made, and that as part of a recapitalization, the junior preferred will either convert to common or eventually resume dividends.

Weeks, Not Months

It’s been reported that the time frame for the response to the White House memo will be weeks, not months. This likely means that Treasury will submit its memo to the White House before the end of the second quarter, when the next net worth sweep payment would be due:



This will mean that the government will be in a position to stop the sweep before the end of June if it indeed determines that capital will be part of any solution. Meanwhile, FHFA has been working on finalizing the capital rule that will eventually be used to determine that Fannie and Freddie are adequately capitalized and permits them to exit conservatorship. That capital looks like it will be between 2.5% and 3.25%, which the Moelis plan says that it can raise.

Recapitalization Mechanics

In a recapitalization, only sources of funds are relevant. Uses of funds are a non-starter until the companies are deemed adequately capitalized by their regulator. In this case, it’s basically an Excel “Goal Seek” formula where the amount of capital that is being determined would have arguably prevented the need for a bailout back in 2008. As such, if you look at the capital structure, you have senior preferred, junior preferred, commons and warrants. You can’t recapitalize with the senior preferred’s net worth sweep in place. You can’t really raise capital to recapitalize without resolving the dozens of lawsuits against the government for its actions against Fannie and Freddie during conservatorship. The amount of money that the companies need to have in order to be recapitalized exceeds multiple years of normalized earnings so a capital raise is required. As such, senior preferreds basically need to be written down entirely or converted to common. Junior preferred need to either do nothing or be converted to common. Common gets to keep their shares. Warrants continue to be valid unless there is an adverse legal ruling against them.

Commons vs. Preferred

I own junior preferred stock, which I think will most likely convert at par value into the IPO in some way shape or form. The trick there is that for each preferred share class, each class needs a 2/3 vote to make that happen.

I think commons are probably eventually worth $4-15 in a Moelis-style recapitalization outcome, but some recapitalization proposals push for commons getting less than that.

Summary and Conclusion

I own Fannie and Freddie junior preferred stock. I have over 100% of my net worth in this position and have been allocated this way for what seems like at least a few years. The government has been moving slow, and it looks like Comptroller of the Currency Joseph Otting was planning to take action but a decision was made to not take any major action until Calabria was officially confirmed. The time frame for GSE reform has always been pushed back. It got pushed back until after tax reform. It was pushed back because of the Housing Jumpstart bill by Bob Corker. Now we have a divided Congress. Republicans couldn’t pass housing reform when they controlled both the House and Senate, so it’s not really likely at all for meaningful legislation at this point. As such, the next step really is administrative action, and it’s just a matter of time until they stop the net worth sweep and begin recapitalizing. John Paulson once said that he didn’t think that the net worth sweep would change until they had a plan in place.

An investment in Fannie and Freddie is a bet that they will eventually be recapitalized, and the sooner they are recapitalized the better for preferred shareholders. Realistically, it’s going to take a year or two for the companies to raise basically a decade’s worth of earnings via secondary offerings. Any recapitalization must begin with the end of the net worth sweep. The fact that Treasury is going to submit its plan within weeks, instead of months, may mean that there are no more net worth sweeps. It’s hard to say given that the capital rule isn’t finalized yet.

All things considered, the plan for recapitalization continues to fall into place, and the stock market isn’t oblivious to this fact, as the prices of the equities here are catching a bid.

Disclosure: I am/we are long FMCCH, FMCCI, FMCCL, FMCCN, FMCCP, FMCCS, FMCCT, FMCKP, FNMAM, FNMFN, FNMFO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source:

Initial Public Offering & Preferred Stock News


Author: Continue reading Have We Seen The Last Frannie Net Worth Sweep?

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Pinterest Tops Targeted IPO Range to Raise $1.4 Billion – Fortune

Pinterest raised about $1.4 billion in its initial public offering, pricing its shares above a targeted range as the year’s tech unicorn stampede gains momentum.

The digital scrap-booking company sold 75 million shares Wednesday for $19 each, after marketing them for $15 to $17, according to a statement. Based on the number of Class A and B shares outstanding after the offer, as detailed in a regulatory filing, Pinterest’s IPO price would value it at about $10.1 billion.

Including restricted stock and additional shares that could be sold by the underwriters, the IPO values the San Francisco-based company at about $12.7 billion, said a person familiar with the matter who asked not to be identified because those details weren’t public. Pinterest’s last valuation, from a private funding round in 2017, was $12.3 billion.

The listing is the second biggest in the U.S. so far this year, after Lyft’s $2.34 billion IPO and ahead of Tradeweb Markets’ $1.24 billion offer in March.

Those listings are likely to be eclipsed by Uber, whose IPO is expected to take place in May. Uber will seek to raise about $10 billion in an offering valuing it at about $100 billion, people familiar with its plans have said.

Zoom Video Communications Inc. also priced its IPO Wednesday, raising $751 million in 2019’s fourth-biggest listing so far. Other high-profile companies considering going public include Slack Technologies, Postmates, Palantir Technologies and Airbnb.

Pinterest took a slow and steady approach to growth and making money from the service, compared with the faster expansion rates of Facebook, Twitter, and Snap when they went public. Pinterest earlier revealed about $756 million in revenue from online advertisements in 2018, a 60 percent growth rate that accelerated from the year prior. Its net loss shrunk to $63 million in 2018 from $130 million in 2017. Pinterest says 265 million people use the digital scrapbook at least once a month.

Analysts expect revenue will likely come more from squeezing additional ad dollars from the base of users Pinterest already has, rather than growing its total audience.

The offer was led by Goldman Sachs, JPMorgan Chase. and Allen & Co. Pinterest is set to begin trading Thursday on the New York Stock Exchange under the symbol PINS.

Source:

“ipo” – Google News


Author: Continue reading Pinterest Tops Targeted IPO Range to Raise $1.4 Billion – Fortune

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‘Eat Your Own Cooking’ Comes to China’s IPO Market – Wall Street Journal

SHANGHAI—Investment banks handling initial public offerings on China’s new technology board will themselves have to buy and hold sizable stakes in the companies—an unusual rule meant to prevent the banks from overpricing deals.

In guidelines released Tuesday, Shanghai’s stock exchange said sponsors of IPOs on the Science and Technology Innovation Board would need to buy between 2% and 5% of the shares sold in any listing. The investment banks must hold these stakes for at least two years, the exchange said.

Source:

“ipo” – Google News


Author: Continue reading ‘Eat Your Own Cooking’ Comes to China’s IPO Market – Wall Street Journal

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Nasdaq executive says companies want to IPO before 2020 election – Business Insider

When clients chat with Nasdaq about the timing of their IPOs, they’re not worried about the next potential market downturn.

Instead, it’s the 2020 presidential election that has companies racing to the markets, according to Jeff Thomas, Nasdaq’s senior vice president of western US listings and capital markets.

“It’s definitely going to create noise, uncertainty, and maybe volatility. So that’s something that we hear from clients, that they are looking at 2020 as maybe a little more volatile,” Thomas told Business Insider in an interview.

“Just think about what the news cycle is going to be like next year. How many candidates are there in the Democratic race already?” he added.

As one of the two main American stock exchanges, Nasdaq plays a key role in getting companies ready for their public debuts. The exchange worked with Lyft on its March IPO, which valued the ride-hailing company at $21 billion. The video conferencing company Zoom is expected to list on Nasdaq on Thursday at an IPO that could value the company at around $9 billion.

When it comes to planning around volatility, many companies look to the Cboe Global Markets Volatility Index, known as the VIX, to figure out when to schedule an initial public offering, Thomas said.

Though IPOs typically take months, if not years, to prepare for, the VIX comes into play when planning the final stretch. Ttypically companies want their roadshows — a window of around two weeks when companies pitch their stock to investors — to take place while the VIX is below 20.

“That’s generally a sign that the markets are open and it’s more likely that you’re not going to have a big market correction affect the pricing of your IPO,” Thomas said.

Read more: One of PagerDuty’s earliest investors shares why he went big on the IT-management company before it reached $1.76 billion

Major spikes on the VIX don’t always correspond with presidential elections, though data from the Federal Reserve Bank of St. Louis shows show a link between a high VIX number and general political uncertainty.

The VIX hit 59.89 in October 2008, just ahead of the presidential election that brought President Barack Obama in for his first term. The VIX hit 42.96 in September 2011, just as Occupy Wall Street took over the streets over lower Manhattan. And it hit 44.28 in August 1998, just before Kenn Starr released his report investigating President Bill Clinton.

Source:

“ipo” – Google News


Author: Continue reading Nasdaq executive says companies want to IPO before 2020 election – Business Insider

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UPDATE 2-Pinterest valued at $12.7 bln in IPO, sign of tech demand after Lyft struggles

struggles@ (Adds detail on performance of IPOs in 2019)

NEW YORK, April 17 (Reuters) – Pinterest Inc’s initial public offering set the online scrapbook company’s valuation at $12.7 billion on Wednesday, above its expectations and a sign of strength for the tech IPO market after Lyft Inc’s struggles.

Pinterest, where users save ideas for clothes, décor and recipes, is due to start trading on the New York Stock Exchange on Thursday. Its performance will be a key test of the tech IPO market after the Nasdaq debut of ride-hailing start-up Lyft at the end of last month.

Lyft shares have dropped around 17 percent from its IPO price, raising concerns about bigger rival Uber Technologies Inc when it prices its IPO next month.

A key difference between Pinterest and Lyft however were their valuation expectations. Lyft, which lost $911 million last year, was seeking a valuation of up to $24.3 billion in its IPO, higher than the $15 billion valuation it attained in its latest private fundraising round in 2018. Pinterest lost $63 million in 2018.

Pinterest’s initial target range had set it on course to be valued below its last private fundraising valuation of $12.3 billion in 2017.

Pinterest had set a $15-$17 target range. At $19 per share, Pinterest raised around $1.4 billion at a roughly $12.7 billion valuation.

The fact that Pinterest attained a higher valuation in the IPO will be a relief to investors who participated in prior fundraising rounds and gives some vindication to the company ahead of its public market debut.

Pinterest is also the most high-profile listing of a U.S. social media company since Snap Inc in 2017, a stock which is down more than 30 percent below its IPO price.

Other IPOs this year, such as cloud computing company PagerDuty Inc and jeans maker Levi Strauss & Co have also traded above their IPO prices since going public.

Investors in IPOs typically expect new companies to outperform the broader market. Renaissance Capital’s IPO exchange traded fund is up 30 percent so far in 2019, compared with a 15.7 percent rise in the benchmark S&P 500 Index .

IPOs of Pinterest and other such loss-making unicorns — startup companies with valuations of at least $1 billion — have presented a predicament for investors sitting on the fence. They do not want to miss out on popular companies with fast growth, but at the same time have to weigh the risks of businesses with unproven economics.

Pinterest will trade under the symbol “PINS”. Goldman Sachs & Co LLC, JPMorgan and Allen & Company are the lead underwriters on the Pinterest IPO.

(Reporting by Joshua Franklin in New York; Editing by Lisa Shumaker)

Source: IPOs
Author: Continue reading UPDATE 2-Pinterest valued at $12.7 bln in IPO, sign of tech demand after Lyft struggles