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Pinterest Block Trade Prices at Bottom of Range

Drew Singer

(Bloomberg) -- Pinterest Inc. shares fluctuated on Wednesday after a large block of shares was said to change hands overnight. The deal probably doesn’t reflect negative sentiment around the stock ahead of earnings this month, two analysts said.

A person familiar with the matter said Goldman Sachs was managing the 4.68-million share block trade on behalf of an unknown holder. The share sale launched on Tuesday, the same day that selling restrictions lifted for insiders and other pre-IPO shareholders. The selling shareholder is likely a pre-IPO investor that is broadly shifting away from the internet space, Pivotal Research analyst Michael Levine said Wednesday morning in a phone interview. He upgraded the stock to buy from hold on Wednesday afternoon.

“There’s some really early money in this,” Levine said in the interview. “So if you’re no longer involved in consumer internet, you’re gone. If you’ve been in it since 2012, you’re gone.” He named Andreessen Horowitz and Bessemer Venture Partners as possible sellers.

Levine thinks other pre-IPO holders are less likely to be selling at this price level.

“Based on how much the stock has pulled back, it’s actually gotten pretty attractive,” he said. “I think a lot of people are short and negative on this and I suspect earnings will be a very positive catalyst.” Wednesday’s upgrade did not adjust Pivotal’s $32 price target, which is below the Street average of $34.

Read more: Pinterest’s Early Investors Get Chance to Sell After 42% Rally

Wells Fargo analyst Brian Fitzgerald agreed.

“We do not see this as pessimism ahead of earnings, or the fundamentals with regards to this year’s IPOs,” he said in an email interview. Fitzgerald rates Pinterest a market perform with a $34 target.

Shares opened as Wednesday’s worst performer in the 21-member Dow Jones US Mid Cap Media Index, before turning positive later in the morning. Pinterest reports third-quarter results on Oct. 31 after the market closes.

The share sale priced at $25.00, the bottom of its $25-$25.25 offering range, the person familiar with the matter said Wednesday morning. Shares traded as high as $36.83 in August after the April IPO priced at $19.

(Updates with Pivotal upgrade, Wells Fargo comments.)

--With assistance from Ryan Vlastelica.

To contact the reporter on this story: Drew Singer in New York at dsinger28@bloomberg.net

To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Jim Silver, Jeremy R. Cooke

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