What kind of revenue numbers would justify Pinterest’s $200 million valuation? Atlantic writer Alexis Madrigal and others have used back-of-the-envelope math to explain this valuation. In his article, “Why Pinterest Is Playing Dumb About Making Money,” Madrigal puts Pinterest’s annual revenue at $45 million a year. Based on statistical modeling, I believe there is only a .25 percent chance that Pinterest is making that much money.Considering all possible scenarios — not just the most optimistic ones — let me show you why and how much Pinterest earns.
Madrigal calculates Pinterest revenue from its only known source — affiliate fees from SkimLinks. “So, Pinterest has 10 million users,” writes Madrigal. “Let’s say that the average across all of them is that they buy items valued at $10 in a month through affiliate links on Pinterest. That’s $100,000,000 of sales for which Pinterest would get credit. That’s $3.75 million in monthly revenue, or $45 million of annual revenue.”
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