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Pinterest's $5 Billion Market Valuation Is Not Absurd

Stocks in this article: GISAMZN

He adds, "Revenue and profitability thresholds required for IPOs remain far tighter than they were in the late 1990s, so we are on safer ground nationally today by that measure."

Building long-term value for Pinterest is key.

Despite slow ad revenue growth, Pinterest has a chance of proving skeptics wrong. Pinterest launched its first paid ads campaign "promoted pins" in March, asking for $1 million and $2 million commitments from big advertisers including General Mills (GIS) and Nestle. Pinterest priced CPMs, or cost per thousand impressions, between $30 and $40.

Social media remains a tech trend. According to Gigya, in the fourth quarter of 2013, Pinterest accounted for nearly 25% of all social network shares from third-party sites and apps. Millions of people shop social online and the numbers are only growing.

Let's take a look at some more facts.

Pinterest is aggressively capitalizing on big data. The company spoke at VentureBeat's DataBeat conference earlier this week and shared insights on how its data scientists are leveraging Amazon's (AMZN) Web Services' RedShift to run interactive analysis on its data. With money to burn, it is also experimenting and using A/B tests for further growth.

More popular than ever, there are currently over 70 million Pinterest users who have uploaded more than 30 billion pins and created 750 million boards resulting in an 50% increase over the course of six months.

The company recently increased its search and discovery offerings with new Guided Search and Custom Categories features. Pinterest also improved Related Pins in the past few weeks.

Be optimistic -- Pinterest will scale.

i believe Pinterest will indeed prove its world of skeptics wrong. Its valuations are commercially attractive. It's only a matter of time before investors will see if revenue match Pinterest's valuations.

At the time of publication the author had no position in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

>>Read more: Lenovo Must Team Up With BlackBerry to Fight Apple and Samsung

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