Pinterest Shareholders Deserve a Better CEO

By Douglas A. McIntyre Updated Jan 6, 1:32AM EST · Published Nov 1, 6:25AM EDT

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Pinterest Shareholders Deserve a Better CEO — © Thinkstock

Pinterest Inc. (NYSE: PINS) shares were wrecked after an earnings report that shook even the company’s most faithful followers. CEO Ben Silbermann tried to make the numbers out to be a solid improvement in the business. Wall Street sold the shares down to an all-time low. Silbermann is one of Pinterest’s founders, which gives him leverage to hold his job. The company’s stockholders deserve better.

While Pinterest’s revenue rose 47% in the most recent quarter to $280 million, it managed to lose $125 million, compared to a loss of $19 million in the same quarter last year. Monthly active users rose 28% to 322 million. Even though the increase seems substantial, it was a disappointment to shareholders. One reason was that most of the growth was international, while the U.S. improvement was modest, up 39% to $251 million. Astonishingly, Pinterest had a market capitalization of $13 billion just before earnings were announced.

Pinterest went public on April 19 of this year. That day, its share price rocketed 28% to $23.75. After the earnings announcement, it fell to just above $20. It had hit $36.83 shortly after the IPO, based on the belief that Silbermann had built one of the few social media businesses that had a bright future.

In early October, Pinterest’s lock-up period expired. This means 81% of the company’s shares became available to trade. Many investors stuck with Silbermann, which turned out to be a mistake.

Silbermann violated the cardinal rule of internet company IPOs. He was unable to grow his company fast enough. That, combined with incredible losses, throws Pinterest into the club of failed unicorns, the promise of which disappeared just as the company sold shares to the public. Silbermann has made out fine, because his shares, like those of early investors, are still solidly in the black.

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While Silbermann’s post-IPO investors have been badly damaged financially, he has not. The one thing he needed to deliver, ongoing hyper-rapid growth, is where he was wanting.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.