Pinterest is in talks with investors to raise $500 million in a round of funding, according to the Wall Street Journal. The social media scrapbooker was previously valued at $5 billion when it raised $200 million in May 2014. However in the current talks, Pinterest is valued at roughly $11 billion, which is more than double what it was just 10 months ago. This current lofty valuation represents the potential that Pinterest has going forward.
The social media site is reported to have had 75.8 million visitors in January, an increase of 37% year-over-year, according to comScore.
Basically, Pinterest allows users to create an online scrapbook or compilation of images and other media according to their interests, hobbies and so on. Then users may share their media or “pins” with other users.
Some companies have taken advantage of Pinterest’s opportunities as a means to captivate hobbyists and grow their own customer bases. Reportedly, the company is developing a “Buy” button on the site that will allow users to purchase goods from other companies through the Pinterest site. This is a huge opportunity for Pinterest to drum up some e-commerce, in the same sense that sites like eBay Inc. (NASDAQ: EBAY), Alibaba Group Holding Ltd. (NYSE: BABA) or Amazon.com Inc. (NASDAQ: AMZN) are capable of, but coupled with the social media aspect that has a firm grip on the millennial demographic.
The social media scrapbooker plans to use the new funds to maintain its recent and rapid growth of its relatively small company of roughly 500 employees.
It is interesting to compare Pinterest’s valuation with some other social media firms before they were acquired. When Facebook Inc. (NASDAQ: FB) acquired photo-sharing sited Instagram for $1 billion in 2012, both firms were still privately held. Facebook also purchased WhatsApp for $19 billion.
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Another large, significant social media buyout, dating back to 2006, was the Google Inc. (NASDAQ: GOOG) acquisition of YouTube. The deal went down for $1.65 billion. Since that time, YouTube has been a worldwide phenomenon, enabling people to connect and share videos across the globe.
Both Instagram and YouTube were valued at far less at the time of their respective acquisitions than Pinterest was, even just last May. This begs the question of whether Pinterest intends on going public at some point to free up more capital or if it is looking for a buyout.
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