Ben Silbermann, co-founder and chief executive officer of Pinterest Inc., center, rings the opening bell on the floor on the New York Stock Exchange during the company’s initial public offering (IPO) in New York, on Thursday, April 18, 2019.
Michael Nagle | Bloomberg | Getty Images
Pinterest is set to release its first quarterly earnings report as a public company after markets close on Thursday.
Here are the numbers analysts are expecting for Pinterest’s first quarter of 2019:
- Loss per share: 11 cents, according to Refinitiv consensus estimates
- Revenue: $200.6 million, according to Refinitiv
Pinterest has shown its strength among certain key demographics, but has had to work harder to expand beyond its core audience. The company revealed in its S-1 filing that it 80% of its total U.S. audience is comprised of moms ages 18-64, based on an independent Comscore study. It also claimed that more than half of U.S. millennials use its service.
The company has since begun making strides internationally, claiming “significant growth” in international MAUs over the past few years as it has focused on localizing content. Pinterest said in its IPO filing that it expects this demographic to continue to outpace U.S. user growth in the near term.
Pinterest said it had 80 million monthly active users in the U.S. in the first quarter of 2018, growing to 82 million in the last quarter of the year. Internationally, Pinterest counted 160 million monthly active users in the first quarter of last year compared to 184 million in the last quarter.
Still, U.S. users remain a larger source of revenue for Pinterest, generating an average revenue per user (ARPU) of $1.59 in the first quarter of 2018 and growing to $3.16 by the last quarter. International ARPU was 5 cents in Q1 2018 and grew to 9 cents in Q4 2018. For Pinterest’s first quarter of 2019, there were not enough analyst estimates to get a clear sense of expectations on MAU and ARPU growth.
Pinterest is much smaller than some of its social media peers, like Twitter, which counts more than 300 million MAUs and Facebook, which claims over 2 billion. But Pinterest’s leadership has resisted the label of social media in the first place, with CEO Benjamin Silbermann telling CNBC on the stock’s debut day that it was really “a utility.”
That mentality has kept Pinterest largely out of the focus of discussion about the spread of misinformation online as regulators narrow their sights on tech companies. Pinterest notably suspended search results for terms related to vaccination in February when it found out false anti-vaccine information was spreading on its service.
Still, Pinterest is very much dependent on other tech companies to keep its own operations running smoothly. The company disclosed that a change to Facebook’s login authentication system negatively impacted its user growth in the second quarter of 2018.
American comedian Hannibal Buress has a rule for business investments
Hannibal Buress is perhaps best known for being one half of American surrealist comedy series “The Eric Andre Show” and the star of Comedy Central’s “Broad City.”
The 36-year-old got his big break writing for NBC’s “Saturday Night Live” and regularly appeared on the late night comedy circuit alongside the likes of Jimmy Kimmel and David Letterman, before going it alone with a string of headline gigs.
Less well known, however, may be his shift into the world of business as an investor in early stage start-ups, ranging from tech to coffee.
Yet, there’s an important strategy the comedian has taken from the stage to the boardroom, he recently told CNBC Make It.
“The way comedy helps with businesses is just idea generation: Being able to come up with a lot of ideas and concepts that connect and might not connect,” Buress said at RISE tech conference in Hong Kong.
“Come up with 10 and yeah, two or three are going to hit, ya know,” he continued.
That’s been an important approach Buress has applied to the companies he invests in, he said, because it helps him decide if the idea has room to run in the long term.
“When I am investing in a company and I talk with the founder, if it’s a product or his idea or a company where I immediately start thinking of ideas for them — how to promote or how to expand — then that’s usually a company I’ll invest in,” said Buress.
“If it strikes creativity for me, that makes me excited to invest,” he said.
That creativity recently saw Buress form a community center — named Melvina Masterminds — to provide activities in technology and the arts for young people in his former neighborhood on the West Side of Chicago.
“If I’m immediately thinking of ideas, then that’s something that’s not going to end,” he said. “The process kind of continues.”
Disclosure: NBCUniversal is the parent company of NBC and CNBC.
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China credit push to small firms falters in factory heartland
Chinese employees working on an energy-saving bulb production line in Suining, Sichuan province, China.
STR | AFP | Getty Images
China’s campaign to boost loans to small firms was supposed to support the economy during its biggest slowdown in decades, but banks’ reluctance to lend has left exporters and manufacturers in its southern industrial belt struggling to pay the bills.
Despite prodding from Beijing, several bankers have told Reuters they have little appetite to lend to smaller companies due to the uncertain economic outlook, the U.S.-China trade war and a years-long drive to purge risks from the financial system.
That has chilled credit flows to private sector firms, undermining stimulus measures that were designed to cushion the impact of slowing demand.
In the southern city of Dongguan in Guangdong province, one of the country’s major manufacturing hubs, some small firms are moving production overseas in the face of operational and financing challenges.
“These days the most discussed topic — something that we always talk about in meetings — is whether we should move to Vietnam. Many of my clients have moved there, ” Li Jiajun, the chief financial officer at Guangdong LiShun Yuan Intelligent Automation, told Reuters.
LiShun, which makes paper box packaging machinery, lost financing from two of its four banks in the second quarter, halving its total credit line to 10 million yuan ($1.5 million).
One of those two banks — both are mid-sized — blamed its tighter lending policy on the first half’s economic climate, while the other said its local branch was banned from approving new loans due to a spike in bad debts, he said.
As a result, the company, which expects to generate 250 million yuan in revenue this year, is delaying orders worth nearly 20 million yuan following the cut and taking “defensive measures” — slashing its payroll by 40% and selling equity to raise funds.
“Government policy and implementation on the ground are still somehow disconnected. It’s not so easy — at least, I haven’t enjoyed much benefits so far,” Li said of China’s efforts to boost lending.
Tightened risk control
In China, the state sector has long absorbed the lion’s share of corporate lending from an industry dominated by government-controlled banks, forcing smaller borrowers across the country to rely on non-bank “shadow” lenders, which have been squeezed in the crackdown on financial risk.
Pedestrians pass by Chinese multinational banking company China Construction Bank Corporation (CCB) branch in Hong Kong.
Budrul Chukrut | LightRocket | Getty Images
“We are better than we used to be, but far from serving so many small companies in need,” Bao Jiehan, vice president of the Dongguan branch of China Construction Bank, the country’s second-largest lender, told Reuters.
Only 26% of China’s tax-paying businesses have bank loans, leaving “plenty of room” for banks to lend, a banking regulatory official said.
Financing is especially tough for exporters who have been squeezed by the trade war, as banks tighten scrutiny and impose stricter risk controls, bankers and companies said.
Chen Xiuxia, chairwoman of Guangzhou-based Choice International, said lenders have gradually halved its credit line to 30 million yuan since President Xi Jinping’s 2017 call for banks to curb financial risks.
Her efforts to secure more lending have not succeeded so far, with banks demanding heavy collateral and many non-bank lenders shut down.
“De-leveraging is aimed at the financial system but businesses like us are hit as a knock-on effect,” said Chen, whose company exports goods like air conditioners and cars to Africa and expects to generate $100 million in revenue this year.
Luo Zhiquan, chairman of Dongguan Gowin Import & Export, is trying to obtain a 5 million yuan loan using an office building as collateral to add to his 10 million yuan credit line. His bank will only lend 50% of the property’s value.
That was due to strict bank risk control over wobbling exporters amid the U.S.-China trade war. Gowin, which trades for 200 local manufacturers, saw its annual order value drop by 10 percent this year due to a 50 percent plunge in exports by his clients to U.S. buyers.
“Some banks just do not want to do business with trading companies anymore,” said Luo, recalling what a Dongguan-based rural commercial bank told him when stopping his credit line.
Flock of geese
Chinese policymakers are calling on the Big Five state banks to be “lead geese in the flock” in the push to boost lending.
Outstanding bank loans issued to small firms rose 21% on-year to 10.3 trillion yuan at end-May, driven mostly by the Big Five, which have extended more credit at cheaper rates.
In April, China’s State Council set a target requiring the Big Five to increase such loans by 30% this year and cut their rates by 1 percentage point.
In Guangdong, CCB said it has hiked small business lending by 45% to 97.1 billion yuan in the first half of 2019.
Its main strategy is to increase the numbers of borrowers while reducing the average loan per company to rein in risk, bankers said. The average amount is 630,000 yuan for the bank’s 140,000 small business loan borrowers in Guangdong, said Liu Lele, vice head of small business lending at CCB Guangdong.
In the past, most small business loans averaged 10-20 million yuan per borrower, said Bao of CCB Dongguan.
Small business loans are priced at 5.3% on average, from 6% last year, said Liu, following the government’s April mandate requiring the Big Five to cut small firms’ financing costs.
Overall the Big Five’s lending to small business rose 23.7% in the first five months, while their average interest rate decreased by 0.65 percentage point to 4.79%.
“We are trying to break even. Profit is very thin, definitely less than 1%,” said Liu, who hopes to adopt a more market-oriented approach to pricing loans in the future.
Although analysts see risks to banks’ profitability and asset quality from the government’s lending drive, state bankers say this is not an immediate concern for big banks and regulators who have set a higher tolerance for small firms’ bad loans.
Some smaller-sized banks, however, are more conservative in their lending.
“We are still going through de-leveraging and structural changes of the economy,” said a senior executive at a lender based in northern China that is active in Dongguan.
“In an economic downturn, banks’ risk appetite is low.”
At the same time, some small companies’ appetite to borrow has diminished as economic prospects dim.
Engineers assemble intelligent robots at Chuangze Intelligent Robot Co., Ltd. on April 29, 2019 in Rizhao, Shandong Province of China.
Zhang Jingang | Visual China Group | Getty Images
Guangdong Songqing Intelligent Technology, an industrial robotics maker, has cut this year’s sales target as clients delay purchase orders in a wait-and-see approach, chairman Xiao Yongxiang told Reuters. Last year, the company closed its low-end mechanical arm business as demand shrank.
Xiao said he wants to raise 20 million yuan by selling equity to pay back half of his bank loans and ease the pressure from 120,000 yuan in monthly interest repayments.
Several bankers across China told Reuters that loan demand from qualified borrowers has weakened this year.
“Clients tell me labor costs and rent are high, trade frictions are hurting exports, their profits are getting thinner and thinner, and it’s just getting harder and harder to do business,” said Sun Shanming, vice general manager of the small business lending department of CCB’s Guangzhou branch.
US-China trade, oil, currencies in focus
Stocks in Asia Pacific were set to trade mixed on Wednesday following developments on the U.S.-China trade front.
Futures pointed to a higher open for the Nikkei 225 in Japan, with the Nikkei futures contract in Chicago at 21,680, as compared to the index’s last close at 21,620.88.
Shares in Australia, on the other hand, were set to see opening declines. The SPI futures contract was at 6,691.0, as compared to the S&P/ASX 200’s last close at 6,724.60.
In corporate news, Japan’s Mitsubishi Motor is set to release its earnings for the first quarter later on Wednesday.
Overnight on Wall Street, the Dow Jones Industrial Average closed 177.29 points higher at 27,349.19, while the S&P 500 also gained 0.7% to finish its trading day at 3,005.47. The Nasdaq Composite added 0.6% to close at 8,251.40.
On the trade front, in-person trade negotiations between the U.S. and China will begin next week, sources told CNBC. They said White House officials are looking at a longer-term timeline.
Meanwhile, Boris Johnson is set to be the U.K.’s next prime minister after winning the ruling Conservative Party’s leadership race on Tuesday. Johnson has previously stated that the U.K. must leave the European Union by the October 31 deadline “do or die, come what may.”
The British pound last stood at $1.2432, after seeing a high of $1.248 yesterday.
“In our view, Johnson’s desire to push for Brexit, deal or no deal, increases the chance of an early general election and some possibly nasty GBP outcomes,” Rodrigo Catril, senior foreign exchange strategist at National Australia Bank, wrote in a note.
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 97.705 rising from levels below 97.5 yesterday.
The Japanese yen, widely viewed as a safe-haven currency, traded at 108.20 after weakening from levels below 108.0 yesterday. The Australian dollar was at $0.6993 after declining from levels above $0.702 in the previous session.
Here’s a look at some of the data set to be released in the day ahead:
- Hong Kong: NagaCorp earnings
- Japan: Leading index at 1:00 p.m. HK/SIN, Line earnings for the second quarter, Mitsubishi Motor earnings for the first quarter
— CNBC’s Fred Imbert contributed to this report.
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