In a sign IPO sellers are not tone deaf, Pinterest is pricing its 75 million share IPO at $15-$17 a share, which at the $17 range would raise $1.3 billion and value the company at below the $12 billion it was valued at during its last round of fundraising in 2017.
By contrast, ride-hailing service Lyft went public last month with a valuation 50 percent above its last round of funding.
But Lyft's rocky debut has been an exception. Since Levi Strauss went public on March 21, eight IPOs have had market caps over $100 million.
Returns have been good. Five are trading above their initial price, three below. The average return since Levi Strauss is 16.1%.
But the gains have all been on the first day of trading, for the most part. The aftermarket return (trading after the first day) for the eight has been -1%.
This is just the first round of more than 200 IPOs scheduled to go public soon. Kathleen Smith at Renaissance Capital notes that the real test will be coming soon: "The earliest ones out of the gate tend to be more profitable, and they tend to be priced more reasonably. As the cycle moves on, everyone gets sloppy about pricing, and returns tend to slip. But we are not at that point yet in the IPO cycle."
As a warning, she pointed to Lyft, which was the first of the recent money-losing, highly valued unicorns to go public, and its reception has been rocky. Pinterest also lost money last year, though they were profitable in the fourth quarter.
Smith believes investors will be comparing Pinterest to near competitors like Snap, Twitter, and Facebook (Instagram).
IPOs in 2019 (from initial price)
Correction: This story was revised to correct when Lyft began public trading. it was last month.