Google and Pinterest- Is There an Interest?

DJ is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Whenever a tech company becomes hot, you can almost always count on Google (NASDAQ: GOOG) to attempt to buy it. They tried to buy Groupon, they tried to buy Yelp, they tried to buy Path -- and they weren’t successful. But on the other hand, they were successful in acquiring YouTube, Picnik, and let’s not forget Android.

Now there is some buzz that they may try to buy the social bookmarking site Pinterest. Pinterest is a website that excites some people, and leaves others feeling confused. It has what I call the “Twitter effect” as in people know it’s popular, but they don’t quite get the purpose of the site.

Add me to the second group of people.

Despite the confusion, Pinterest has raised $27 million in funding (at a $200 million valuation), and there’s talk that they may want to eventually launch an IPO.  Based on that, I’m not so sure that a Google acquisition is in the cards.

If the rumor is true, the main problem with a Pinterest IPO is a lack of revenue. Yes, the site has tons of users, but how are they going to make money? Right now there are no ads on the site and no paid membership options. My guess would be that they plan to somehow sell their users information, interests, and browsing habits to advertisers. That seems to be the new startup model- offer something for free, grow via a viral campaign, and then eventually start to sell your users information. We can thank Facebook for this.

The second problem is that this site can be easily cloned, and you can bet if Google doesn’t get their hands on it, they will do just that. Don’t believe me? Look at Google Offers (after Groupon declined) and Google Places (after Yelp declined).

I predict that down the line we can expect either an announcement that Google has acquired Pinterest, or an announcement that Google has added “Pinterest-like” features to Google Plus.

No matter how this plays out, Google is likely to remain a winner. Despite not meeting Wall Street expectations, they had a good fourth quarter with revenues topping $10 billion for the first time.  Net revenue was $8.13 billion, which is an improvement from a year ago when the net revenue was $6.37 billion in the fourth quarter.

 

 


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