PINS - Embedded Expectations Analysis - 2019 04 17
Assuming a $16 share price, the midpoint of current price ranges, and an anticipated 529 million shares outstanding, Pinterest, Inc. (PINS:USA) will IPO with valuations well above corporate averages relative to UAFRS-based (Uniform) Earnings, with a 37.1x Uniform P/E. At these levels, the market is pricing in expectations for Uniform ROA to expand from 8% in 2018 to 29% through 2023, towards the high end of mature peer levels, accompanied by 6% Uniform Asset growth going forward.To meet these market expectations, PINS must offset user engagement and historical profitability concerns with user growth, ad growth, and social e-commerce execution. However, if they fail to execute on these strategies, market underperformance is likely.
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