Pinterest, Inc. is a visual discovery engine people use to find inspiration for their lives, including recipes, home and style ideas, travel destinations and more.
Pinterest went public back in April. I only know this because my wife was telling me about Pinterest years ago and suggested that she buy some stock in the company. Pending her time horizon, maybe it was good she didn’t because in the Fall the stock price started declining. Then in late October after the company announced their third quarter earnings, the stock fell 17% because revenue and average revenue per user didn’t meet expectations. So Pinterest’s stock, once above $30 was selling below $20 becoming a buy low, sell high type of trade set-up.
The fundamentals made Pinterest stock an appealing proposition as well. Pinterest had a user base of over 320 million globally and its user base was only growing as its year-over-year user growth last quarter came in at 30%, the highest among the publicly traded social media companies. Equally important that users base is significantly under-monetized, average revenue per user rate is $0.90 cents vs. $6-plus rates of Twitter and Facebook. So the thesis was simple, in the world of social media platforms where Facebook and Twitter user growth was flattening out, Pinterest’s user growth was just getting started.
Then the upgrades started coming. In mid-January Brian Fitzgerald upgraded Pinterest from Equal-weight to Overweight and hiked the price target from $28 to $30. Brian’s rationale was Pinterest has delivered generally solid results, with healthy audience and engagement growth, strong revenue growth and solid progress toward profitability.
NOTE: Also in mid-January a report from eMarketer said that the Pinterest is now the No. 3 social-media platform in the U.S., beating out Snap Inc.
Then Wednesday Rob Sanderson, an analyst at Loop Capital Markets initiated a buy rating and a $29 price target for Pinterest citing the company has great potential as an advertising and e-commerce platform. He also reiterated the company’s healthy user growth and the potential to monetization that user base.
That same day Twitter announced their fourth quarter earnings. For the first time in company history, Twitter exceeded $1 billion in quarterly revenue and beat expectations for user growth. for the first time this holiday season while coming in ahead of Wall Street’s expectations for user growth. On Thursday, Twitter’s stock price increased 16%, the largest single-day percentage gain since 2017. On the back of Twitter’s earnings results, Pinterest also rose about 5% that day.
Now it was Pinterest turn to report earnings on Thursday. After the Market on Thursday Pinterest (NYSE: PINS) reported better-than-expected fourth-quarter EPS and sales results. Earnings for the quarter were $0.12 / share vs. expectations of $0.08 and sales for the quarter was $400 million vs. expectations of $371.
"We are pleased with the performance of our business in Q4 and the many milestones we achieved in 2019," CFO Todd Morgenfeld said in a statement. "We scaled the business to over $1 billion in annual revenue, grew to over 300M monthly active users and opened 21 new international advertising markets. We look forward to the opportunities ahead of us as we continue to invest in the Pinner and advertiser experience."
Personally, I think price will have a hard time getting through the $28 level. Pending how the US equity markets open this week coming up, price might even fill the gap. Although I missed the bottom on Pinterest, the chart suggest to go long if price makes it down to the daily demand at $19.50.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Posted via Steemleo
