Pinterest Inc. should have been the story on Thursday. It had the name that consumers knew, the eight-digit private valuation and a co-founder who has been a superstar in Silicon Valley since the service first hit the internet.
Finally, but Pinterest s
PINS, + 28.42%
original public offer was overshadowed by "something IT managers can buy."
Zoom Video Communications Inc.
ZM, + 72.22%
completed their first trading day on Thursday with a valuation of over $ 3 billion higher than Pinterest, according to FactSet, after stocks literally zoomed and increased more than 70% . Pinterest did just fine on its own, when the photo sharing and scrapbooking area, which was popular with women, priced their 19 dollar shares to raise $ 1.4 billion, so they jumped 28%. But it could not be compared to Zoom's eye-popping, dot-com era-worthy first-day pop.
While Pinterest had the name recognition in its favor, the palms against the higher growth of Zoom and the history of problems for social media companies on Wall Street did not help. Zoom also had the only thing that no technical unicorn had previously brought to the market: Profits.
"They are completely different businesses," said Dan Morgan, senior portfolio manager for Synovus Trust Co. "Zoom is profitable and Pinterest is not, but they work closer [to profitability than Uber and Lyft]. [Zoom] is old school, these guys do something IT managers can buy."
Morgan said Pinterest also reminds him of other social media, With a business model that deals with data collection and advertising, the latter generates the bulk of the revenue. He added that the business model might be old for some investors, especially after Facebook Inc.s
woes over the past year.
In addition, Pinterest looks like a problem similar to Snap Inc.
when it was published in 2017, with the growth rate of monthly active user level gradually slowing. In the fourth quarter of 2018, Pinterest's monthly active users grew to 265 million, up 22.7%; in the third quarter they grew 23%, in the second quarter 24.8%, and in the first quarter last year MAUs increased 36.6% on an annual basis.
"Maybe Pinterest is a bit of a tedious story," Morgan said.
Pinterest co-founder Ben Silbermann is the higher profile of the two company's CEOs, partly because Pinterest is a well-known consumer brand. joined with the other two Pinterest founders Zoom CEO and founder Eric Yuan, a soft-spoken contractor, came to the United States from China in the mid-1990s, working on WebEx and then Cisco after being bought. to Zoom as he thought of other ways to visit his girlfriend, now his wife, in China, without the 10-hour train rides, both have large controlling shares or voting rights in their companies, Silbermann has a Wikipedia site, Yuan does not – at least not yet.
Zoom is not perfect, it is in a very competitive market, and you may have heard of some of its rivals: Microsoft Corp.
MSFT, + 1.31%
Skype, Alphabet Inc.
GOOGL, + 0.11%
GOOG, + 0.00%
Google Hangouts and Cisco Systems Inc. s
CSCO, + 0.16%
WebEx. But Zoom has tasted well with existing video conferencing players like Cisco: The software-based platform is in the cloud and works with Cisco and PolyCom hardware, now owned by Plantronics Inc.
"The Zoom Conference Room Connector can take these traditional hardware video conferencing systems to the cloud, enabling users to leverage their existing investments while exploiting our platform." Zoom said in its regulatory filing.
Most importantly, Zoom actually brought a profitable business to the table.
"It was the first unicorn that was made with profit," said Alejandro Ortiz, chief analyst at Shares Post Inc., a secondary market for the sale of shares in private companies.
Zoom also had a higher growth rate than Pinterest. Zoom's revenue increased by 118% to $ 330.5 million in its last fiscal year, making it a major appeal to growth investors who have felt they have missed the biggest growth stages in the latest IPOs. Pinterest had a higher annual revenue value of $ 756 million, but the 60% increase from the previous year ended Zoom's dizzying performance.
Momentum investors were obviously excited about Zoom's growth and profits, but now the company can be charged with its fierce valuation. As MarketWatch pointed out on Thursday, the company now trades 49 times its annual sales, giving it the highest value in terms of sales on Wall Street.
It is perhaps Pinterest's advantage that Zoom was the one who ended up with the biggest pop, as that appreciation will put a lot of pressure on future earnings to live up to. But it feels like the nerdy girl in the back just won prom queen instead of the head cheerleader.
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