Pinterest is about to go public. It has priced its shares at $19, which gives the company a value of $10 billion. That is a lot of money for a public corporation that generated almost $760 million and lost $63 million in 2018. The math is such that initial investors may hammer the stock soon after it begins to trade.

The argument for Pinterest’s value is that its growth rate was 60% last year. That adds it to a list of companies, like Twitter, that set valuations on rapid growth, relatively small losses and large numbers of users. Pinterest has over 275 million users and is growing. That puts it at about the same size as Twitter, based on that measure.

Lyft, which has lost 20% of its value since its IPO, is not a good measure of what may happen to Pinterest shares. Evidence suggests that hedge funds that took ownership in Lyft when it was private started to short the shares almost immediately. Pinterest investors may be blocked from such activity, which takes it off the table as a risk.

The most likely reason Pinterest shares will come under pressure is that they probably will surge as the stock opens. It will be too great an enticement for some investors to forgo a 20% or 30% gain on a day of trading. If the shares sell down the next day or the next, analysts will start to say the stock is overvalued, which will feed a selling frenzy.

Pinterest shares will be priced at $19, but they won’t stay there.

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