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Friday, May 18, 2012

Facebook IPO Fails to Live Up to the Hype, Pinterest Gets 100 million Investment from Rakuten

The Facebook IPO failed to live up to its hype, with the stock gaining just 0.61% on its first day of trading, finishing at 38.23. In fact, rumors are that underwriters JPMorgan Chase had to exercise the contingency plan and put up a fight to avoid the stock finishing the day with negative gains. Even then, a gain of just $0.23 cents on the first day is embarrassing for an IPO that had been talked about for years, and a poor showing compared to other Internet and social commerce companies.

Last year, shares of LinkedIn closed at $94.25, more than 109% above the $45 IPO price on their first day of trade on the New York Stock Exchange, and Google had gained 18% on the first day of public trading when its  stock priced at $85 closed at $100.34.

Meanwhile, as per a report from Businesswire, Pinterest, which is now the 3rd largest social network, raised $100 million in an investment round led by Japanese Ecommerce giant Rakuten and a group of other investors such as FirstMark Capital, Bessemer Venture Partners, and Andreessen Horowitz. 

This investment is meant to help Pinterest upgrade its services and expand its international user base. The move also signals the start of a partnership between the social sharing site and Rakuten, with the goal of helping Pinterest expand in Japan and in 17 other markets that Rakuten is currently targeting.


“We see tremendous synergies between Pinterest's vision and Rakuten's model for e-commerce. Rakuten looks forward to introducing Pinterest to the Japanese market as well as other markets around the world,” said Rakuten CEO Hiroshi Mikitani.


For his part, Pinterest CEO Ben Silbermann stated, “Our goal is to help people discover things they love, by connecting people through their shared interests. Bringing Rakuten on board gives us an amazing opportunity to move a step closer to this goal.”


Rakuten is currently one of the world’s top Internet companies. Rakuten Ichiba, its flagship business-to-business-to-consumer (B2B2C) model e-commerce site is now the largest e-commerce site in Japan and one of the largest in the world in terms of sales.


Rakuten has been reinforcing its global presence by gaining ownership of leading e-commerce sites such as Play.com, Tradoria (renamed to Rakuten Deutschland), Ikeda (now Rakuten Brazil), Priceminister, and Buy.com.


Rakuten’s strategy somewhat different from other marketplaces in that its model focuses largely on the Japanese service mindset Omonetashi, which seeks to encourage sellers to form strong and lasting relationships with their customers, thus integrating and element of social commerce into what used to be pure e-commerce sites.
                                                                                                 Yash Talreja, Independent Consultant
                                                                                                              

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