Pinterest is a forum of endless creativity, and while it does get the traffic and heavy usage, monetizing is rather tricky. Many investors are pulled in with the illusion that PINS does well. What can you expect from a company that specializes in images. And the image Pinterest sold in claims of high profit potential, was a myth told with empty promises covering a real landscape of challenges, expenses, and the problem of scalability.

Adding the ability to buy products directly from the app seems like a good idea, but I believe in the future it will turn out to be a bad idea. The typical Pinterest user likes the app because of the personal creativity of the contributors, like a craft fair. Adding the ability for direct sales from the app has invited generic products promoted by commercialization, quick market penetration. The creative contributors that give Pinterest’s appeal will be diluted by dollar-sign-eyed, greedy, drop-shipping, made-in-Alibaba vendors. Try it, I dare you! Look up something you’re interested, you’re bound to be flagged for a product that looks innovative and something you think you need in your creatively ambitious life, and it will come with a price tag saying you have two days left to get it at 60% off, and that there are only 10 items left in stock. A classical play on exploiting human emotion. Well, fight that urge and look up that product on Amazon, and you’ll see the EXACT product photo, with a different vendor or branding, and at 20% cheaper price.

So, Pinterest is first an advertising company (and it does this well), and secondly, a waste of online e-commerce which uses the large net casting technique to make a sale to suckers. Instagram, SnapChat, FaceBook, and Pinterest are all following this same model, using user data to bring the mall to you. There’s a serious flaw in this revenue stream design, and investors need to pin this in their minds, and tame their expectations and view these social media companies as what they are- a shiny advertising platform.

Disclaimer: I am short PINS, FB, and soon to be SNAP . Target for PINS is $16.

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